Chinese tech stocks are soaring as Alibaba is soaring. Investors may still want to be wary.

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Chinese tech stocks surged on Thursday and the United States and China agreed to hold a virtual summit before the end of the year between its two leaders.

But the challenges for Chinese companies – and US-China relations – persist.

Chinese tech stocks were given a short reprieve on Thursday, buoyed by a broader sense of relief in the market as US policymakers have so far avoided a confrontation over the US debt ceiling.

E-commerce giant

Ali Baba

(ticker: BABA) rose 7.3% in Hong Kong, US-listed stock up 9.4%, on course for its best day in more than four years, when stocks surged by 13.3% in one day in June 2017.

Have I got

(DIDI), the struggling ridesharing group that has been a lightning rod for scrutiny of Chinese technology listed in the United States, rose 5.6% in New York City. Technical group

Tencent

(0700.HK) climbed 5.6% in Hong Kong, while its peers

Baidu

(BIDU) grew 5.6%, and e-commerce giant

JD.com

(JD) rose 6% in New York. The outperformance of tech stocks helped the Hong Kong Hang Seng Index climb 3.1% on Thursday. The Hang Seng Technology Index rose 5.2%, but remains 44% below highs reached earlier this year.

The industry has been under pressure for much of the year, amid a broader regulatory crackdown on some of its largest companies as Beijing places more emphasis on social good than profitability and focuses on on a technology that can help strengthen its independence in an increasingly hostile world.

As Alibaba is enjoying its best three-day period since July 2020, the stock has fallen more than 30% this year and was still on track for its worst year on record.

The United States and China agreed on Wednesday that President Joe Biden and President Xi Jinping will meet before the end of the year. It will be a virtual meeting and follows a call between the two leaders held in September, it was their first in seven months. The virtual summit was announced shortly after White House national security adviser Jake Sullivan met with senior Chinese foreign policy adviser Yang Jiechi in Zurich, according to the Wall Street Journal.

But investors are not overly enthusiastic, and for good reason. Senior Trade Envoy Katherine Tai said this week that the Biden administration is looking at all tools, including the new ones, to try to enforce the Phase One trade deal and said it would be a starting point as the United States was forging a new course in its relations with China. .

“While we would expect minimal material improvement in the tone or substance of their relationship in the coming months, we still see investment opportunities on both sides, particularly in the areas of capital markets, technology, cybersecurity and climate change, ”said strategists led by Mark Haefele, chief investment officer at UBS Global Wealth Management.

“In our opinion, investors should avoid taking sides. The best long-term approach is to seek exposure to the different economic cycles, growth opportunities and industry trends offered by the two countries, ”said the UBS team.

Swiss bank strategists noted speculation about possible talking points, including trade, Taiwan and climate issues.

Write to Jack Denton at [email protected]