After a turbulent selloff and massive headwinds, China appears to be gaining positive momentum, as evidenced by a major institutional investor buying up tech stocks from the country. J.P. Morgan Asset Management has bought up shares of Alibaba Group Holding Ltd. and JD.com Inc. this year. Rebecca Jiang, co-manager of three China equity funds, told Bloomberg that she’s more optimistic about the sector as regulatory hurdles are being cleared, while macro policies offer support.
“A clearer and more defined regulatory framework around these internet businesses is a definite positive,” said Jiang. “The worst is over.”
Speaking on CNBC’s “Street Signs Asia,” Alexander Treves, managing director and investment specialist at J.P. Morgan Asset Management, said that the country’s “emphasis on Zero COVID,” combined with its “strong commitment to a 5%-plus growth target” makes JPMAM “very confident that the Chinese government will… Stimulate monetary policy, ease fiscal policy, and… Step back on some of the regulations, so we’ve got a high degree of conviction in those macro factors there.”
These factors, combined with the low valuations for Chinese tech stocks, make JPMAM enthusiastic about the sector.
And JPMAM isn’t alone. Investors have been coming back to tech stocks after a year of selloffs that erased nearly $2 trillion of returns. And with Chinese authorities working to revitalize the economy, the country’s stocks have attracted buyers even as global indexes have stumbled into bear country.
More than half of the assets in EMQQ Global’s Emerging Markets Internet & Ecommerce ETF (NYSE Arca: EMQQ) are weighted toward China. By focusing on the internet and e-commerce in emerging markets, EMQQ looks to capture the growth and innovation happening in some of the largest and fastest-growing populations in the world.
“Sentiment around China has been negative for so long that severe pessimism has set in. But the reality is that we are starting to see real green shoots and catalysts emerge,” said Kevin T. Carter, founder and CIO of EMQQ Global. “COVID lockdowns are loosening. There are signs that the crackdown in the tech space is decelerating. Valuations are very low, and expectations are even lower. Companies in the space are buying back their own stocks at record levels.”
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