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Asian tech stocks gain with Alibaba split

Alibaba Group shares and other Chinese tech stocks were leading equity gains in Asia on Wednesday after the tech giant announced plans to break up its operations. The group said a day earlier it was planning to divide into a total of six new units. Some investors see the move as a sign the Chinese tech sector may enjoy more freedom going forward after several years of strict regulation by national authorities.

Alessandro Fezzi, LGT
Temps de lecture
5 minutes
Alibaba Gebäude
© Shutterstock

Aside from Chinese tech firms, banks remained in focus, particularly French banks, which came under scrutiny in Tuesday trading. Unlike other recent drops in bank share prices, which were often linked to general financial sector fears, French bank stocks came under pressure due to a probe by French authorities into tax fraud and money laundering at several national institutions. Société General shares ended the day down more than 1% on Tuesday.

Bank of England Governor Andrew Bailey acknowledged at a hearing before parliament on Tuesday that tightening credit conditions could affect the UK economy. Higher borrowing costs affect businesses and consumers alike. Following a 25-basis-point increase last week, the Bank of England’s key interest rate stands at 4.25%, the highest since the Great Financial Crisis of 2008. At the same time, inflation in the country was over 10% in February.

Markets in Asia were trading up as some investors interpreted Alibaba’s restructuring to mean Beijing could loosen its grip on the broader tech sector. Alibaba’s Hong Kong-listed shares were trading up more than 13%. Hong Kong’s Hang Seng Tech Index jumped 2.8% while the Hang Seng Index was up 1.9%. In mainland China, the Shanghai Composite was trading slightly lower while the Shenzhen Component gained 0.3%. Japan’s Nikkei was up 0.6%.

In New York, markets trended lower on Tuesday. The Dow Jones Industrial lost 0.12% to finish the day at 32’294.25 points. The S&P 500 dropped 0.16% to close at 3971.27 points. On the Nasdaq, the major tech indices couldn’t build on Alibaba’s success and lost around 0.5%.

Corporate news in focus: No major corporate news scheduled for Wednesday.

Economic data in focus: EIA Crude Oil Inventory Report (16:30 CET).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi,
Source: LGT Bank (Switzerland) Ltd.

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