DJ SMIC Jumps Again as Investors Turn to Policy-Supported Chip Sector

By Yifan Wang

Shares of Semiconductor Manufacturing International Corp. jumped Tuesday as investors shaken by China's aggressive regulatory actions sought refuge in the Beijing-backed chip-making sector.

The Hong Kong-listed stock was 12% higher at HK$27.05 at the midday break, gaining nearly 24% over the past two days to trade at its highest level since early April.

Other Hong Kong-listed chip makers also surged, with Hua Hong Semiconductor Ltd. climbing 9.3% and Solomon Systech (International) Ltd. rising 10%.

The buying was driven by investors keen on industries and investments less exposed to potential tightening of regulations, analysts said. Tough new rules on tutoring companies over the weekend as well as an ongoing crackdown in the technology sector has left many foreign investors concerned about the government taking further control of the economy.

Hong Kong's Hang Seng Tech index tumbled 6.6% Monday, the worst performance for the benchmark since it launched about a year ago.

Investors think the semiconductor industry is very unlikely to be the target of regulatory curbs, two Hong Kong-based equities analysts said, because Beijing is in the midst of a national drive to build its domestic chip supply chain and has vowed to support the industry.

Investors also may have accelerated building positions in chip stocks, especially market leaders like SMIC, before second-quarter earnings releases, one of the analysts said. He added that the industry's results are likely to be strong, driven by sharply higher chip prices amid a global supply shortage.

Write to Yifan Wang at yifan.wang@wsj.com

(END) Dow Jones Newswires

July 27, 2021 01:37 ET (05:37 GMT)

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