Today, China announced it would be working closely with regulators to address foreign IPO listing issues to achieve regulatory clarity, sending the Hang Seng index trading up as much as 9% from its six-year lows.
The government said it will “actively release policies favourable to markets.”
Making a comeback
Here’s exactly what was released by Chinese regulators as of this morning:
“We believe that through joint effort both sides will, as soon as possible, be able to make arrangements for cooperation in line with the two countries’ legal and regulatory requirements.”
Shares of popular names such as Alibaba, DiDi, and JD are soaring amid the news up, 20%, 36%, and 21%, respectively. A nice boost, but had you “bought the dip” in China in the last year, your investment still isn’t sitting too pretty right now — and it’s not unwarranted.
Many of these names have appeared relatively cheap by valuation metrics, but a multitude of uncertainties coming from the region has made investors err on the side of caution.
Put it this way; infections are at all-time highs with a COVID-zero policy in place, tech crackdowns have been ongoing until now, alliances have been uncertain amid the Russia-Ukraine conflict, delistings and regulatory clarity have been up in the air, and the Evergrande crisis is still unfolding.
Cathie Wood, among other notable investors, significantly reduced exposure to China for those exact reasons. But at least efforts are being made now to address at least one of the issues. Geographic diversification has always been important for investors, and China is one of the most promising nations in the world to get exposure to — it’s grown 10-fold in recent decades.
While it doesn’t solve all Chinese stock investors’ problems, it does show steady progress, and we could see a rebound upwards from here.
Financial Writer at MyWallSt
David's favorite stock is Google. He's a daily user of its YouTube platform, where you can learn or find something brand new at the touch of a button. He believes the company will continue to grow for many years to come.