Chinese Tech Stocks Surge on Renewed US-China Trade Optimism

Chinese Tech Stocks Surge on Renewed US-China Trade Optimism ## US-China trade optimism Markets cautiously gave a thumbs up yesterday to the renewed optimism that the US and China seem to be engaging in more meaningful talks towards sealing a trade deal. US Commerce Secretary Wilbur Ross stated that both the economic powerhouses could reach a settlement “they can live with, and that addresses all the key issues.” The SPDR S&P 500 ETF Trust (SPY) was up 0.47% on January 9, whereas the iShares Dow Jones US Technology (IYW) jumped 1%. American technology giants Apple (AAPL) and Amazon (AMZN) were up 1.7% and ~0.2%, respectively. American depository receipts of Chinese technology companies NetEase (NTES), Baozun (BZUN), and IQIYI (IQ) were up 6.6%, 3%, and 1.8%, respectively, yesterday. Among the Chinese technology companies, notable gainers were HUYA and Bilibili. Let’s take a look. ## Chinese tech stock rally On January 9, HUYA (HUYA), a leading live game streaming platform in China, witnessed a sharp 6.8% rise in its ADRs (American depository receipts). The company’s ADRs opened at $18.32 and rose to touch an intraday high of $20.20 in afternoon trading. Later on, HUYA ADRs declined marginally to close on $19.45, up ~6.8% from the previous close of $18.22. HUYA ADRs were listed at $16.06 on the NYSE after its IPO in May last year. After soaring to highs of $46.20 after its IPO, the company’s ADRs have significantly declined since then. Much of the decline was related to trade war fears and Chinese authorities’ decision not to approve new games since March 2018, which negatively impacted the game industry in the country. However, 2019 appears to be a different case. The company’s ADRs have soared 23% on a YTD basis as of January 9. Bilibili (BILI), another Chinese technology major, is a video sharing website involving a game, comics, and animation. BILI ADRs surged ~6.6% yesterday. The ADRs reached an intraday high of $16.37 on January 9 before closing on $15.75, up 6.6% from the previous day’s closing price of $14.78. Noted equity research company Morgan Stanley has expressed bullishness towards Chinese technology companies in 2019. Morgan Stanley revised its price target on BILI to $17.0. This price target revision implies an 8% premium on BILI ADRs closing price on January 9.