Kuaishou Shares Rally From Last Week’s Record Low

(Bloomberg)—Kuaishou Technology shares rallied as much as 9.5% in Hong Kong on Tuesday, set to snap a five-day slide and partly retrace last week’s record loss as some brokers started to turn optimistic on the stock’s outlook.

Positive notes from brokers including Sanford C. Bernstein & Co. and China International Capital Corp. (CICC) are aiding sentiment after the short-video app’s stock plunged by a record last week. That drop followed an influential state-backed newspaper urging tighter regulation of internet video content, and also came as a share lockup expired, permitting the sale of a massive amount of shares purchased by investors.

Kuaishou had one of the best first days of trading when it listed in Hong Kong in February, but the stock had slumped as much as 80% from its peak. The decline has come amid fears over Beijing’s crackdown, as well as concerns about its profit outlook after first-quarter earnings missed estimates.

The share price contraction has fully reflected the negatives, CICC analysts including Yanyan Xiao wrote in a note on Monday, adding that there should be further upside for video content penetration.

Before the rebound, the stock closed at a record low on Monday and was down 28% from its IPO price. It remains oversold on some technical parameters even after Tuesday’s bounce. The gains will give heart to investors in Chinese tech names after a government clampdown on sectors ranging from education to technology wiped out about $1 trillion off shares listed on the Chinese mainland, in Hong Kong and the U.S. last month.

Contact editor Michael Bellart (michaelbellart@caixin.com)

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