Two of the biggest Chinese internet giants reported sales that topped estimates. The results lifted some of the gloom that had beset the sector following COVID-19 lockdowns and regulatory headwinds.

Alibaba Group Holding Ltd. and Baidu Inc. reported sales growth that were higher than expected, suggesting some of China’s largest businesses have found ways to wade through strict COVID restrictions in key cities. The revenue beats offer a rare but encouraging sign in an economy that’s come to a standstill due to stringent movement controls.

More ‘consumption confidence’ in China

“We do expect the second quarter to mark the bottom in growth for our companies,” Ronald Keung, head of Asia Internet research at Goldman Sachs Group Inc. said in a Bloomberg TV interview. “Depending on the COVID policies and the government’s policies in helping to drive back consumption confidence, we do expect easier comps for China tech companies particularly as you enter into September and December quarter.”

Investors are also hoping the more than a yearlong crackdown on private enterprise is approaching an end. Policy makers have been vowing support for the industry as part of their effort to support a sputtering economy.

After slumping to a record low in mid-March, Hong Kong’s Hang Seng Tech Index has seen brief bouts of recoveries as policy optimism attracted dip buyers. The stock index remains down more than 60% from a February 2021 peak as investors struggle to reach consensus on whether the sector is set for a sustainable rally.

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