(Bloomberg) -- US-listed Chinese stocks are on track for a third day of gains after China approved a second batch of video games this year, marking a further softening in the country’s stance toward internet firms.
Live-streaming platform Bilibili Inc . (NASDAQ:BILI) was among the top gainers of the group, rising 8% in premarket trading. In large-cap names, Alibaba Group Holding Ltd (NYSE:BABA) jumped 5% and peer JD.com (NASDAQ:JD) gained 4.2%. The KraneShares CSI China Internet ETF (NYSE:KWEB), an exchange-traded fund that tracks Chinese tech stocks, rose as much as 4.4%, extending a 9% rally in the previous two sessions.
After a tech crackdown that ensnared sectors from e-commerce to fintech and even online education, Beijing has recently taken a more lenient line, introducing a raft of policies aimed at propping up the group and the Chinese economy. The Wall Street Journal reported that regulators are preparing to wrap up their investigation into Didi Global Inc. and restore the ride-hailing giant’s main apps to mobile stores as soon as this week.
“I think the worst is behind us in terms of earnings and regulations,” said Adam Montanaro, investment director at Aberdeen Asset Management. The gaming approvals are a continuation of “the government’s more supportive tones and gestures toward the internet economy,” he said.
Bruised Chinese internet stocks have emerged as a bright spot at a time when US peers are still gripped by prospects of higher interest rates. Easing of lockdown measures in major cities, together with a string of better-than-expected earnings, are also boosting risk sentiment.
That said, Beijing’s persistence with its Covid Zero strategy remains a source of concern and some bearish strategists, including DZ Bank AG’s Manuel Muehl, view the current optimism as premature.
Recent gains have trimmed the Nasdaq Golden Dragon China’s drop this year to 15%, beating the Nasdaq 100’s 22% slump. While the basket has topped a key moving average, it’s still down more than 60% from its peak set in February last year.
©2022 Bloomberg L.P.