The annual decline in Chinese technology shares destroyed $1.5 trillion in market value, which may eventually be completed. Investors look beyond regulatory barriers and focus on valuations. One year ago, Rally took the Hang Seng Technical Index to the highest level; Since its inception in July 2020, the disorder began; traders struggled to get to the exit due to high ratings and Beijing’s sweeping crackdown on private enterprises.
There are signs indicating that the route may be coming to an end. Since the end of September, sector revenue estimates increased by 12%; While the analyst’s target prices imply solid income. The Hang Seng Tech Index trades near its cheapest rating; Thus surpassing offshore peers.
China’s growth shares still have solid foundations. According to experts, they may change their business models by considering regulatory accounts. However, in terms of evaluation, they look beautiful.
The Hang Seng Tech Index Forward Price-Earnings Rate trades at record lows; Accordingly, it is 21% lower than the historical average. Other valuation multipliers, including price-to-sell and price-to-free cash flow ratios, fluctuate at historically low levels.
China Tech Shares
Investors are battling uncertainty over Chinese tech firms over Beijing’s restrictions. However, confidence in profitability has been improving in recent months with a 12% increase in the Hang Seng Tech Index; This is almost three times more than Nasdaq 100.
Bargain hunters appeared. Half of the most popular ETFs tracking stocks on the Hong Kong list reflect the effectiveness of the technology stocks listed in the city. ChinaAMC Hengsheng is Internet Science and Technology Industry ETF; its TECH ETF received nearly $840 million this year.
China Tech Bears are disappearing. Short selling interest in Kuaishou Technology and Meituan is declining. Betting against Kuaishou – one of the most reduced stakes in Hong Kong before; The most significant slowdown in the index fell to around 4% last year; Compared to 20% by mid-2021.
European stocks fluctuated on Thursday. Traders rated strong earnings from Reckitt Benckiser and Kering. The White House has denied Russian allegations that the country is withdrawing troops from the Ukrainian border. The Stoxx Europe 600 Index rose 0.2 percent. Xetra Dax added 0.3 percent. The FTSE 100 lost 0.2 percent. The Moex stock index fell 1.7 percent. The ruble dropped 0.5 percent against the dollar. Topix ended the Tokyo trading session with a decrease of 0.8 percent. Hang Seng reduced Its previous losses. Shares of Reckitt rose more than 5 percent. After the manufacturer of Clearasil and Strepsils announced revenue growth that exceeded analysts’ expectations.
Global markets rose sharply over the past week; Increased volatility caused by tightening central banks’ monetary policy; Intensified reaction to the developments on the Ukrainian border. The minutes of the last policy meeting of the US Federal Reserve on Wednesday highlighted the fight against high inflation. However, some officials have warned of risks to markets and the broader economy by tightening policies too quickly. Oil markets remained tense. Brent crude oil fell to $94.02 a barrel, or 0.8 percent.
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