Chinese regulators gave unconditional approval Tuesday to Tencent Holdings (TCEHY) to acquire Sogou, China’s second-largest search engine company.
That was a huge relief to investors who in recent weeks have seen Beijing crack down on the country’s big Internet companies.
Tencent shares were 1.44% on Wednesday after climbing 4.23% on Tuesday. Ali Baba, which gained 3.40% on Tuesday, added 0.95% today.
Tencent announced its plan to acquire Sogou last year in a deal valued at $3.5 billion, or $9 a share. In addition, Tencent already had a large stake in Sogou.
The big test of the rally comes tomorrow when China reports second quarter GDP, retail sales, and industrial production. Economists expect those numbers to show China’s economy slowing from the torrid pace set in the first quarter.
Although everyone knows the first quarter pace was unsustainable, it’s by no means certain that investors and traders won’t sell on the widely expected slowdown