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Chinese tech stocks at rock bottom get buyback seal of approval after Goldman predicts upside

  • Investors may see a series of stock buybacks after China’s CSRC calls for measures to stem market rout
  • Xiaomi joins the fray after Alibaba tops up its buyback programme to a record US$25 billion amid a stock plunge

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Stock buyback euphoria is keeping the local makret upbeat for now. Photo: Bloomberg
Zhang Shidong
Chinese technology titans are fanning a euphoria among investors with stock buybacks to help lift the market from a 10-year low. The trend may have the seal of official approval, after a year of clampdowns and smashed valuations.
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Smartphone maker Xiaomi Corp is the latest to join the fray by announcing a HK$10 billion (US$1.28 billion) programme, giving its shares a pop. Not a bad move to emulate, after Alibaba Group Holding’s 11 per cent rally on the back of its record US$25 billion plan.

Tencent Holdings, the WeChat operator, deflated speculation by not announcing one in its latest report card on Wednesday, after spending HK$2.6 billion on buybacks in 2021. JD.com had expanded the size of its repurchase plan to US$3 billion in December. Lenders like HSBC and Standard Chartered have also unveiled or resumed buyback plans.

“That would be a signal that stocks have bottomed out,” said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “Stock prices have reflected all the headwinds and investments are worthwhile now.”

China’s biggest companies, which dominate the Hong Kong stock market, are sitting on a giant pile of cash. The 66 members of the Hang Seng Index had US$2.4 trillion of cash on their balance sheets in their latest financial reports, according to Bloomberg data, a 23 per cent jump from two years earlier.

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This week’s announcements suggest Chinese companies may have the tacit approval of top Beijing officials who, after a record slump in US-listed Chinese stocks, chimed in last week to soothe frayed nerves among investors in onshore and Hong Kong markets.
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