May 18, 2022 12:36AM ET
Technology stocks led a broad decline in Chinese markets on Wednesday as support pledges from Vice Premier Liu He lacked new details and fresh virus outbreaks in key cities weighed on investor sentiment.
The Hang Seng Tech Index fell as much as 2.3% after rising nearly 6% in the previous session. Hong Kong's benchmark Hang Seng Index and China's CSI 300 Index both fell as much as 1%.
The setback suggests Tuesday's highly anticipated meeting between Liu and some of the country's tech giants disappointed traders who had expected a bolder change of course. Concerns about COVID-19 remained high as cases increased in Tianjin and a cluster grew in Sichuan province.
At a conference on Tuesday, Liu said the government would support the development of digital economy companies and their listing overseas. That triggered a more than 5% rise in U.S.-traded Chinese stocks, but the enthusiasm waned as Asian trading continued.
Meanwhile, data showing that home prices fell for an eighth straight month in April added to investor concerns as strict curbs on the coronavirus were enacted. The deepening slump is another blow to China's battered real estate sector, which authorities have been trying to shore up as part of their efforts to halt the downturn in the world's second-largest economy.
More than a year after Beijing's sweeping regulatory crackdown on private companies, investors remain cautious about re-entering the sector.
In a sign of optimism, analysts at JPMorgan Chase & Co. earlier this week upgraded a number of tech companies, including Alibaba Group Holding Ltd. and Tencent Holdings Ltd., to "overweight," just two months after they rated the sector "not investable."
The Chinese stock market's future performance will depend on whether policymakers deliver on their promises and the country's COVID-19 situation.