Alibaba goes from worst to best performer on Hang Seng Index

[HONG KONG] Alibaba Group Holding's stock has turned from the biggest loser to top gainer on Hong Kong's stock benchmark, as investors turn optimistic that the toughest of China's tech regulation may be over.

Shares jumped as much as 9.2 per cent on Wednesday, extending this month's rally to 27 per cent to be the Hang Seng Index's best performer. It is the biggest contributor to the gauge's gains during the period, after being its largest drag earlier this year through September.

The e-commerce giant unveiled this week one of China's most advanced semiconductors, just as media reports said lead founder Jack Ma made his first overseas trip in more than a year.

The events, and President Xi Jinping's pledge to support development of key technologies, have raised investor hopes that Beijing may slow down its regulatory crackdown on tech firms.

Alibaba representative didn't respond to Bloomberg inquires on Ma's whereabouts.

"The news flow have turned positive for Alibaba lately," said Castor Pang, head of research at Core Pacific-Yamaichi in Hong Kong. "Their efforts to develop chips and Ma's appearance definitely eased investors' concerns about the impact of regulation."

A year ago, Chinese regulators surprisingly suspended Ant Group's US$35 billion listing plan, following Ma's outspoken speech in Shanghai. The crackdown that started with Ma's fintech giant has snowballed into an assault on every corner of China's technosphere as Beijing seeks to end the domination of a few heavy weights and create "common prosperity".

Alibaba's stock contributed to 1 in every 5 of the Hang Seng Index's points loss between the onset of a market rout in mid-February and the end of last month. And it dropped to a record low 2 weeks ago.

"I can see that the worst time is already gone for the e-commerce or Internet industry," said Danny Law, an analyst with Guotai Junan International Holdings.

The Hang Seng Index rose as much as 1.3 per cent on Wednesday, while a measure tracking Chinese tech firms traded in the city jumped 3.2 per cent, adding to its 15 per cent climb from a record low earlier this month.

BLOOMBERG