Chinese technology stocks are surging today after many weeks of sell-off brought about by Beijing’s regulatory crackdown. Excellent results reported by JD.com (JD) and Pinduoduo (PDD), as well as share buyback announcement by Tencent (TCEHY) are helping the rebound.
The most popular China tech ETF (KWEB) is still down more than 50% from its peak in mid-February. Tencent, Alibaba (BABA) and Baidu (BIDU) are among its top holdings. Despite rising uncertainty, some investors have continued to pour money into these beaten down stocks and ETFs.
KWEB has gathered more than $4 billion in assets since February though it remains to be seen whether the worst is over for China tech. Cathie Wood, one of the hottest fund managers on Wall Street currently, warned of a valuation reset’ last month as Ark sold most of Chinese stocks held in its ETFs. They bought back some stocks yesterday.
On the other hand, BlackRock said China should no longer be considered an emerging market and recommended investors boost their exposure to the country by as much as three times.
China has toughened its regulations on sectors ranging from internet, fintech to education and gaming, and introduced new rules about the collection and use of personal data. It appears that the regulators are rewriting the business rules for companies that have grown too big and powerful to control.
Tech IPOs With Massive Profit Potential
In the past few years, many popular platforms and like Uber and Airbnb finally made their way to the public markets. But the biggest paydays came from lesser-known names.
For example, electric carmaker X Peng shot up +299.4% in just 2 months. Think of it this way…
If you had put $5,000 into XPEV at its IPO in September 2020, you could have cashed out with $19,970 in November.
With record amounts of cash flooding into IPOs and a record-setting stock market, this year’s lineup could be even more lucrative.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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