What happened

Lots of Chinese tech stocks soared this week, including iQIYI (IQ -2.40%), Full Truck Alliance (YMM -1.12%), and GDS Holdings Limited (GDS -3.92%), which were up 19.3%, 33.2%, and 30.2%, respectively, at the end of trading on Thursday.

Virtually all Chinese tech stocks rose after last-week's widespread protests paradoxically sparked hopes that China would relax its strict COVID-19 lockdown measures in due course. Some additional commentary from Chinese authorities this week seemed to indicate officials were, in fact, looking for ways to reopen sooner rather than later. The question is, will actions follow the soothing rhetoric?

So what

None of these three tech companies reported earnings this week, although each reported third-quarter earnings the week prior. Interestingly, both Full Truck Alliance and GDS Holdings beat both revenue and profit expectations handily, while iQIYI was mixed, delivering a revenue beat but a miss on profit expectations. Perhaps that explains its relatively lackluster performance this week, compared with the other two.

In addition, Full Truck Alliance and GDS are business-to-business companies. The former is a digital platform linking truckers with shippers, and the latter is a data center and services operator serving large cloud and internet companies.

Business-to-business companies may fare better than consumer companies in a reopening scenario, as China's consumer is under a lot of economic pressure right now. iQIYI is one of three major streaming services in China, so it's perhaps in a more competitive field, as well.

Still, all three stocks would benefit from a reopening and a relaxation of the harsh "zero-COVID" policies implemented by the Chinese government. After last-weekend's violent protests across the country, senior Chinese officials came out this week and signaled the government may bend or relax some of the more stringent lockdowns. However, it's likely many restrictions will remain in place.

Early in the week, officials pointed to increasing vaccinations among the elderly population, as well as a renewed vaccination push among the elderly, perhaps highlighting that as a precursor to reopening. Then on Wednesday, Vice Premier Sun Chunlan gave vague but encouraging remarks regarding zero COVID, saying, "With the decreasing toxicity of the Omicron variant, the increasing vaccination rate and the accumulating experience of outbreak control and prevention, China's pandemic containment faces new stage and mission." Meanwhile, China's National Health Commission (NHC) encouraged local officials to "respond to and resolve the reasonable demands of the masses."

These are fairly vague statements but seem to indicate that China is trying to moderate its lockdowns in order to pacify the discontented populace.

Now what

Stocks can rally by huge percentages when they've already sold off a lot, as these three have. Even after this-week's rally, Full Truck is down 32% over the past year, while iQIYI is down 53%, and GDS is down about 73%.

IQ Chart

IQ data by YCharts.

It's tempting to trade Chinese stocks on these reopening hopes at these beaten-down valuations. However, it's still highly uncertain if or when the country will actually reopen for good. That likely won't happen until next year. With Chinese economic data coming in very weak this week, betting on a strong turnaround remains a highly speculative bet.