Xi's pep talk on blockchain lifts Chinese tech shares

Agence France-Presse

Posted at Oct 28 2019 04:26 PM

Chinese President Xi Jinping attends a welcome ceremony with Brazilian President Jair Bolsonaro (not pictured) outside the Great Hall of the People in Beijing, China October 25, 2019. Florence Lo, Reuters

SHANGHAI, China - Chinese shares closed sharply higher Monday as investors piled into stocks linked to blockchain after President Xi Jinping called for China to step up investment in the technology and increase its role in the economy.

Dozens of tech shares seen as benefitting from a blockchain boom soared by the 10 percent daily limit allowed on China's main exchanges after Xi made the comments in a meeting of top Communist Party leaders focused on the sector.

Xi said blockchain technology, best known for its use in cryptocurrencies like bitcoin, will play an important role in future innovation and that China should increase research and development into expanding its use.

"It is essential for blockchain technology to play a bigger role in building China's strength in cyberspace, developing the digital economy and advancing economic and social development," Xi said, according to a report by state-run Xinhua news agency late Friday.

Companies such as Hundsun Technologies, Easysight Supply Chain Management Co, YGSOFT Inc, and dozens of others with blockchain components to their businesses rose by the daily 10 percent limit.

The feeding frenzy pushed the technology sector index of China's second exchange in Shenzhen up sharply, closing more than 5 percent higher.

"Most of these companies, especially those that are just beginning to state their connection with blockchain today, are trying to take advantage of the hype," Li Shiyu, a fund manager at Guangdong Xiaoyu Investment Management Co, told Bloomberg News.

"It shows how much excitement can be triggered by something stressed as a priority by the top man himself."

The optimism seeped into Hong Kong as well, where Chinese selfie-app leader Meitu's Hong Kong-listed shares soared nearly 25 percent at one point, before those gains were pared back.

Bitcoin soared more than 15 percent to nearly $10,000 -- its highest level for a month -- before ticking back slightly.

Overall, the benchmark Shanghai Composite Index rose 0.85 percent, or 25.12 points, to close at 2,980.05.

The Shenzhen Composite Index, which tracks stocks on China's second exchange, closed 1.58 percent higher, or 25.84 pints, at 1,658.24.

Hong Kong's benchmark Hang Seng Index finished 0.8 percent, or 223.87 points, higher at 26,891.26, boosted by optimism the US and China are on the brink of signing off on a mini trade agreement.

Xi's comments were the latest indication by China that it intends to challenge the United States for world leadership in new technologies.

Earlier this month, the Communist Party's top propaganda chief said China intends to become a 'great power' in the online world.

In other shares, Industrial and Commercial Bank of China lost 0.84 percent in Shanghai to close at 5.93 yuan, while consumer bellwhether Kweichou Moutai added 0.59 percent to end at 1,178.29.