JPMorgan upgrades China’s view of Alibaba, Tencent and Meituan

This photo on September 25, 2020 shows Alibaba Group founder Jack Ma attending the opening ceremony of the 3rd All China Young Entrepreneurs Summit in Fuzhou, Fujian Province, China. Alibaba is one of the Chinese technology stocks recently upgraded by JP Morgan analysts.

Ryumin | China News Service by Getty Images

JPMorgan has upgraded its tech stocks in China against the backdrop of reduced risk. We call the sector “uninvestable.”

US investment analysts have upgraded the stocks of seven Chinese internet companies, including: Tencent, Alibaba, Meituan, NetEase When Multiple onset From “underweight” to “overweight”. This shows that they believe that these stocks, within the scope of analysts, may exceed the average total return of stocks in the next 6 to 12 months.

In a memo released Monday, banking Chinese internet analyst Alex Yao and his team came earlier than expected: “With the recent regulatory announcements, significant uncertainty should begin to ease.” Said.

According to banks, digital entertainment, local services and e-commerce stocks will be “the first batch of outperforms.”

“We believe that key risks in this sector have diminished, especially in terms of regulatory risk, ADR delisting risk and geopolitical risk,” said an analyst at JP Morgan.

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Back in March, Yao and the team said they would consider the sector “investable” for the next 6-12 months. The report after Bloomberg was accidentally published. JPMorgan’s Yao did not immediately respond to CNBC’s request for comment on the allegations made in Bloomberg’s report.

Even before the banks’ March call, China’s Internet stocks had already been hit — months of regulatory uncertainty and concerns over supply chain disruptions due to the mainland’s strict Zero-COVID policy. I was hit.

The HangSengTech index, which tracks the largest technology stocks listed in Hong Kong, has fallen by more than 27% this year as of Monday’s closing price.

Concerns about a higher interest rate environment are also an overhang for the world’s broader tech sector, as major central banks aim to curb hot inflation. Rising interest rates tend to make future earnings of growing companies unattractive.

High tech heavy Nasdaq Composite Index As of Monday’s closing price, Wall Street has fallen by more than 25%.

JPMorgan upgrades China’s view of Alibaba, Tencent and Meituan

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