By Yifan Wang
ZTE shares jumped in China and Hong Kong, as tech stocks broadly rallied after the U.S. Federal Reserve kept rates unchanged at its latest policy meeting.
The stock gained as much as 8.2% in Hong Kong and was last up by 6.2% at HK$27.30. In China, shares were up 4.2% at CNY38.38.
The upturn came amid broad gains in regional tech stocks, as internet giant JD.com rose 2.6% and EV maker Li Auto added 3.1%. The Fed's overnight pause in monetary tightening could raise investors' risk appetite for growth stocks, analysts say.
ZTE's gains also followed the release of bidding results for an open telecom equipment tender from China Mobile. "We saw upside in ZTE's gross profit margin" from the bid's pricing, Jefferies analysts said in a recent note, pointing out that the results' prices suggested the tender comprised lower-spec products that could imply lower costs and better profitability for suppliers like ZTE.
Investor enthusiasm may have gotten a further boost from market speculation about a key Chinese server maker raising artificial-intelligence server prices. ZTE also manufactures servers, and is planning to launch ChatGPT-compatible servers later this year. When company executives unveiled the plan in April, ZTE's shares soared 10% in China within a day.
"It is important to note ZTE has been gaining share in multiple areas including wireline equipment, servers and consumer terminals," the Jefferies analysts said. "We see further upside in ZTE's share in these areas, and believe ZTE remains undervalued."
Write to Yifan Wang at yifan.wang@wsj.com
(END) Dow Jones Newswires
06-14-23 2336ET
