China country-specific exchange traded funds are trying to regain ground as bargain hunters seek out value picks in a battered market.
On Wednesday, the VanEck Vectors ChinaAMC SME-ChiNext ETF (CNXT) increased 3.0%, and the KraneShares CSI China Internet ETF (KWEB) rose 1.6%. Meanwhile, the more widely observed Xtrackers CSI 300 China A-Shares ETF (ASHR) increased 2.3%, and the iShares MSCI China ETF (NASDAQ: MCHI) gained 1.9%.
Analysts and investors said that there was no clear catalyst for the rally in Hong Kong-listed Chinese tech stocks on Wednesday, the Wall Street Journal reports. Nevertheless, they highlighted that buyers appeared to be reassessing the beaten-down segment for the new year due to the relatively lower valuations and an apparent lull in regulatory action from Beijing.
Qi Wang, chief executive of MegaTrust Investment (HK), argued that no news on the regulatory front appears to be good news for Chinese companies.
“The Chinese government now needs to give companies the time to digest and comply with these new rules,” Wang told the WSJ.
While several small rallies in recent months have not helped the Chinese market recover, this rebound could be more lasting if the slower pace of regulatory action continues, according to Chetan Seth, Asia-Pacific equity strategist at Nomura.
“The companies themselves are geared to some very exciting long-term investment themes,” Seth told the WSJ.
However, not all investors are optimistic about this emerging market. David Chao, global market strategist for Asia-Pacific at Invesco, warned that his firm had “taken a much more constructive view” on Chinese shares, especially in tech, for 2022 compared to last year.
Marcella Chow, global market strategist at JPMorgan Asset Management, also cautioned that the upcoming annual meeting of China’s legislature, the National People’s Congress, in March could also provide greater regulatory clarity.
“Frankly, we are now taking a wait-and-see approach until [there is] more policy clarity on the China tech sector,” Chow told the WSJ.
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