China stocks in the internet sector, led by Alibaba and Tencent Holdings, were having their best day Wednesday in nearly three months on signs that heavy-handed regulations are easing.
The encouraging signs began Tuesday when reports said China regulators were concluding a yearlong cybersecurity probe into ride-sharing giant Didi Global. Then on Wednesday, China regulators approved 60 new online video games. That was an increase from 45 approvals in May and none in April. It served as another sign that China's internet regulatory cycle is easing.
Leading the charge of China stocks was e-commerce giant Alibaba. Shares jumped 14.7% to close at 119.62 on the stock market today. JD.com, which competes primarily with Alibaba in the e-commerce field, surged 7.7% to 66.47. Shares of Tencent, a leading provider of online games, climbed 7.6% to 51.45.
While the game licensing freeze is thawing, the latest round of approvals did not include games by Tencent or NetEase.
NetEase, another gaming giant, rose 3.2% to 106.84. Bilibili gained 6% to 29.71. The company provides an online entertainment platform serving younger generations in China.
Bilibili reports first-quarter results Thursday morning.
China Stocks Under Pressure
The pressure on China stocks goes as far back as November 2020 for a range of reasons. This includes Covid-related shutdowns, restrictive regulations and macroeconomic concerns.
But China stocks began showing signs of life in mid-May when JD reported better-than-expected results for its first quarter. Tencent and Alibaba also topped expectations in their quarterly results.
China's tech-sector crackdown erased more than $1 trillion of market value over the past two years. The regulatory overkill has prompted some analysts to call the sector "uninvestable," according to a report from South China Morning Post.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
