China's tech stocks have been stuck in a rut since early 2021 and the selling in the space hasn't abated; investment bank JPMorgan sees an opportunity in these beaten-down stocks.
Time to Accumulate: The bank's flagship China fund has doubled down on Alibaba Group Holdings, Inc. (NYSE:BABA) and JD.com, Inc. (NASDAQ:JD) in 2022, Bloomberg reported, citing filings made at the end of May.
The firm is optimistic on the tech sector amid alleviation of a regulatory crackdown and macroeconomic policy support, the report noted, citing Rebecca Jiang, who manages three China funds with about $20 billion of assets.
She reportedly said the worst is over and that JPM has held onto most of its China tech holdings amid the sell-off. The optimism, according to the fund manager, is due to the fact that the sector provides "critical value" to customers.
The report also noted that the valuations of these stocks are extremely attractive.
Related Link: China's Resilient May Data Offers Glimmer Of Hope, But NBS Warns Of Challenges Ahead
Sell-off Blessing In Disguise? Chinese stocks have rallied in the past month even as the major indices around the world have come under selling pressure.
The upside is attributable to ultra-loose monetary and fiscal policies even as the other global central banks have begun to raise rates to curb inflationary pressures.
The regulatory headwinds and tightening may have been a "blessing in disguise" for a lot of Chinese internet companies, Jiang reportedly said. "I think this helped investors to identify and appreciate their real values."
JPMorgan is also exploring investing in other beaten-down sectors such as property stocks, and in infrastructure and new-energy companies, which stand to benefit from policy measures.
Price Action: Alibaba closed Wednesday's session down 1.17% at $105.15 and JD.com declined 3.50% to $61.42, according to Benzinga Pro data.
