China Tech-Rally

By Ion Jauregui – ActivTrades Analyst
Chinese technology companies have experienced a strong stock market rally following President Xi Jinping's recent show of support for the private sector. During a meeting with executives from leading technology companies, Xi emphasized the “great potential” of the sector and the importance of reaffirming confidence in the Chinese economy. This statement boosted the Hang Seng Tech Index by 3.04% in the morning session and reaffirms the optimism surrounding the growth of the Chinese technology sector.

Tencent: Consolidating its leadership
Tencent, one of China's technology giants, posted a 3.42% rise on the Hong Kong Stock Exchange. The company, with a strong presence in video games, social networks and fintech, has benefited from recent government backing. Despite the strict regulations imposed in recent years, Tencent has been able to adapt to the regulations and strengthen its business model, diversifying its revenue sources. Macroeconomic stability and confidence in the sector could favor its growth in the short term.
BYD: Rise of the electric vehicle
Electric vehicle manufacturer BYD has also been boosted by Xi's statements. Although its growth has been steady, renewed confidence in the private sector may help it consolidate its leadership against global competitors. With government support in energy transition and technology development, BYD could benefit from incentives to expand its production and exports.
Didi: Overcoming the regulatory crisis
Didi, known as the “Chinese Uber,” has been one of the companies hardest hit by the government's regulatory crackdown. However, recent backing for private companies suggests a possible easing of restrictions, which could boost its recovery in the markets. The reopening of the Chinese technology market and strengthening domestic consumption could improve its prospects going forward.

HKIND Analysis
Currently the index has pierced the January 2023 high price around 22,964 and seems to have fractured the long-term downtrend. The trend rebound that has initiated this recovery started in April 2024. Currently the Checkpoint (POC) is around 17,200 points with the last high at 19,437 points. RSI is currently highly oversold at 79.03% so a correction towards 21,304 could occur if the current price high of 23,274 is not pierced strongly. This could lead to a possible temporary sideways movement of the index. If this happens, the index will try to regain its next price zone around 25,082 and then 26,911 points.

Xi Jinping's recent endorsement is a turning point for the Chinese technology sector, providing stability and confidence to investors. While regulatory challenges remain, growth potential remains high for companies such as Tencent, BYD and Didi.





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