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Asian Stocks Soar as China Looks to Tech Sector Amid Economic Slowdown


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Asian stocks marched higher on Thursday amid further signs that Beijing is preparing stimulus in the face of a slowdown in the world’s second-largest economy, with China’s tech sector set to reap some of the benefits.

Wall Street’s Wednesday rally—after inflation data boosted optimism about the future of interest rates—got sentiment off to a good start in Asia on Thursday, but the momentum continued as the region’s tech giants drove even bigger gains.

Hong Kong’s Hang Seng Index rallied 2.6% with the Shanghai Composite gaining 1.3%. In Japan, Tokyo’s Nikkei 225 rose 1.5%.

Hong Kong-listed Chinese tech giants such as Alibaba (ticker: BABA) and (JD) led the charge, buoying the Hang Seng as the stocks gained 3.2% and 6.4%, respectively. Investors have become more bullish on Chinese tech since a historic fine against Ant Group earlier this month added to evidence that almost three years of regulatory pressure on the sector is coming to an end.

More proof came Wednesday as Chinese Premier Li Qiang met top management from the country’s tech companies, with state-run media reporting that he praised the sector as an economic engine and guided for normalized regulation.

The positive comments on China’s tech sector come amid expectations that Beijing is set to unleash stimulus as the world’s second-largest economy faces headwinds. It has created a dynamic whereby “bad news is good news” for Chinese stocks—a trend seen yet again on Thursday as grim economic data raised stimulus hopes and added to the tech-led gains.

Chinese trade figures painted a gloomy picture of the economy, with exports falling by far more than expected and imports similarly coming up short as domestic consumption sags. Chinese exports fell 12.4% on an annual basis in June, worse than the 10.5% decline expected among economists surveyed by FactSet. Imports dropped 6.8% annually, worse than the 5.5% decline forecasted.

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