Why Chinese Internet Stocks Were Soaring Today
Chinese stocks were skyrocketing across the board Wednesday on news that Beijing may be reversing course on its regulatory crackdown after China's economy grew by just 4% in the fourth quarter and stock prices there have plunged. The crackdown was part of China's "common prosperity" campaign, which is intended to boost both social equality and central government control, sometimes at the expense of the nation's most successful companies.
However, with more than $1 trillion in value having been sapped from Chinese stocks and Hong Kong's Hang Seng Index at a six-year low, and with geopolitical tensions simmering due to Russia's invasion of Ukraine, Beijing now seems ready to pivot. Vice Premier Liu He said the government would support the economy and keep markets stable -- welcome reassurance to investors who have seen their portfolios shrink as regulators have levied a series of fines and restrictions on some of China's best-known tech companies. Liu said the government should "actively introduce policies that will benefit markets."
In other words, investors seem to believe that Beijing has decided to switch roles, transforming from an impediment to stock market growth into a supporter of it. That view sent Chinese stocks soaring, especially in the beaten-down internet sector.
Source Fool.com