(Bloomberg) — A potential encounter this week between President Xi Jinping and e-commerce icon Jack Ma, coming after a blistering run by tech shares, could be the next catalyst to extend the rally in China’s stocks.
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Prominent entrepreneurs including Ma have been invited to meet the nation’s top leaders, people familiar with the matter said last week. The potential show of support for the private sector coincides with the recent surge in equities in Hong Kong, driven by growing capabilities in artificial intelligence.
The Hang Seng China Enterprises Index jumped 4.1% on Friday to its highest since February 2022, exceeding an October peak spurred by a stimulus blitz. A tech gauge in Hong Kong entered a bull market earlier this month, fueled by Chinese startup DeepSeek’s AI model that’s hailed as a game-changer.
“Such a high-profile endorsement sends a clear message of support from China’s government, which views the tech sector as a future driver of economic growth,” said Bloomberg Intelligence analyst Robert Lea.
One major driver of the rally is Alibaba Group Holding Ltd., whose Hong Kong-listed shares gained 6.3% on Friday, contributing to a surge of almost 60% since Jan. 13. The company is scheduled to report earnings on Thursday. The options market is pricing in a 7.6% move in Alibaba shares after the results, compared with an average 4.8% after the last eight quarterly reports.
Some investors say the rally is overcrowded and stretched, but Xi’s support would be a boost of confidence to the $16 trillion Chinese and Hong Kong stock markets that have enjoyed steady gains since mid-January.
“The recent developments align with our expectation of a short-term trading opportunity in the Chinese stock market, rather than signaling a structural shift,” said Nenad Dinic, an equity strategist at Bank Julius Baer in Zurich. “Nevertheless, without fresh catalysts from earnings, liquidity flows, or policy signals, the risk of a pullback is increasing.”
A meeting involving Xi and Ma can be a pivotal turning point for Alibaba since Beijing spiked Ant Group Co.’s initial public offering at the 11th hour, halting what would have been the world’s biggest IPO, and marking the start of a regulatory campaign to rein in the sector that had grown perhaps too large and powerful for comfort. It would also send a powerful signal that China’s Communist Party is adopting a more supportive stance toward private-sector companies.
