For Chinese Tech Stocks, No News Is Good News
Hang Seng Tech Index has clawed back 11% after hitting a trough last week.
Hang Seng Tech Index has clawed back 11% after hitting a trough last week.
Shares in major Chinese technology companies like JD.com Inc. and Meituan jumped Wednesday, adding to a recent rebound that suggests some investors see good value in the sector after a bruising 2021.
Analysts and investors said there was no clear catalyst for the rally in Hong Kong-listed Chinese tech stocks. But they said buyers appeared to be reassessing the sector in the new year, given lower valuations and an apparent lull in new action from Beijing.
After roughly a year under siege, the sector was finally benefiting from a lack of new measures, said Qi Wang, chief executive of MegaTrust Investment (HK).
“The Chinese government now needs to give companies the time to digest and comply with these new rules,” Mr. Wang said.
Meituan and JD.com stock jumped 9% and 11%, respectively, in Hong Kong trading. That helped lift the city’s Hang Seng Tech Index by 5%.
The index, which launched in July 2020, has now recovered nearly 11% since it hit a record closing low last Wednesday, the same day that China’s antitrust watchdog levied small fines on Alibaba Group Holding Ltd., Bilibili Inc., and Tencent Holdings Ltd. The gauge fell by roughly a third last year.
Several small rallies in recent months have petered out, but this rebound could prove more enduring if the slower pace of regulatory action continues, said Chetan Seth, Asia-Pacific equity strategist at Nomura. He added that “the companies themselves are geared to some very exciting long-term investment themes.”
David Chao, global market strategist for Asia-Pacific at Invesco, said his firm had “taken a much more constructive view” on Chinese shares, especially in tech, for this year compared with last year.
As of Tuesday, shares in sector heavyweight Tencent traded at a price of about 24 times expected earnings, data compiled by Refinitiv showed, down from 29 times a year earlier.
Other major gainers on Wednesday included Alibaba, Baidu Inc. and Bilibili, whose Hong Kong-traded shares each rose about 6%. All three are also listed in the U.S.
Some market watchers remain wary. Marcella Chow, global market strategist at J.P. Morgan Asset Management, said the annual meeting of China’s legislature, the National People’s Congress, in March should provide more regulatory certainty.
“Frankly, we are now taking a wait-and-see approach until [there is] more policy clarity on the China tech sector,” Ms. Chow said.
Reprinted by permission of The Wall Street Journal, Copyright 2021 Dow Jones & Company. Inc. All Rights Reserved Worldwide. Original date of publication. January 12, 2022.
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1. Full-Doc Loan
A full-doc loan is the most straightforward and competitive option for self-employed borrowers with up-to-date tax returns and financials. Lenders assess two years of tax returns, assessment notices, and business financials. This type of loan offers high borrowing capacity, access to features like offset accounts and redraw facilities, and fixed and variable rate choices.
2. Low-Doc Loan
Low-doc loans are designed for borrowers who can’t provide the usual financial documentation, such as those in start-up mode or recently expanded businesses. Instead of full tax returns, lenders accept alternatives like profit and loss statements or accountant’s declarations. While rates may be slightly higher, these loans make finance accessible where banks might otherwise decline.
3. Standard Variable Rate Loan
A standard variable loan moves with the market and offers flexibility in repayments, extra contributions, and redraw options. It’s ideal for borrowers who want to manage repayments actively or pay off their loans faster when income permits. With access to over 40 lenders, brokers can help match borrowers with a variable product suited to their financial strategy.
4. Fixed Rate Loan
A fixed-rate loan offers repayment certainty over a set term—typically one to five years. It’s popular with borrowers seeking predictability, especially in volatile rate environments. While fixed loans offer fewer flexible features, their stability can be valuable for budgeting and cash flow planning.
5. Split Loan
A split loan combines fixed and variable portions, giving borrowers the security of a fixed rate on part of the loan and the flexibility of a variable rate on the other. This structure benefits self-employed clients with irregular income, allowing them to lock in part of their repayment while keeping some funds accessible.
6. Construction Loan
Construction loans release funds in stages aligned with the building process, from the initial slab to completion. These loans suit clients building a new home or undertaking major renovations. Most lenders offer interest-only repayments during construction, switching to principal-and-interest after the build. Managing timelines and approvals is key to a smooth experience.
7. Interest-Only Loan
Interest-only loans allow borrowers to pay just the interest portion of the loan for a set period, preserving cash flow. This structure is often used during growth phases in business or for investment purposes. After the interest-only period, the loan typically converts to principal-and-interest repayments.
8. Offset Home Loan
An offset home loan links your savings account to your mortgage, reducing the interest charged on the loan. For self-employed borrowers with fluctuating income, it’s a valuable tool for managing cash flow while still reducing interest and accelerating loan repayment. The funds remain accessible, offering both flexibility and efficiency.
Red Door Financial Group is a Melbourne-based brokerage firm that offers personalised financial solutions for residential, commercial, and business lending.
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