China ADSs are flying as fading regulatory headwinds send iQIYI, NIO and Alibaba stocks surging

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The US-listed shares of China-based companies, surged Tuesday, particularly in the interest sector, as an apparent reduction of regulatory scrutiny has emboldened Wall Street analysts and investors to bet on an extended bounce.

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The iShares MSCI China exchange-traded fund MCHI,
+2.58%
rallied 2.5% in morning trading and the KraneShares CSI China Internet ETF KWEB,
+2.31%
hiked up 2.4%, with 42of 48 components gaining ground. In comparison, the S&P 500 index SPX,
+1.51%
rose 1.2%.

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Chinese Vice-Premier Liu He, the country’s top economic official, said overnight that the government supported the development of the sector and public listings for technology companies, suggesting a crackdown on US-listings of China-based tech giants was easing.

Among the more active American depositary shares (ADS), NIO Inc.’s NIO,
+11.76%
charged up 11.1% in midday trading, and have soared 27.1% amid a four-day win streak, which followed a 22-month closing low last Thursday. Trading volume of 56.8 million shares made the stock the most actively traded on the NYSE.

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Tuesday’s rally comes after BofA Securities turned bullish on NIO, citing valuation coupled with easing regulatory pressures. Read more about BofA’s upgrade of NIO.

Shares of iQIYI Inc. IQ,
+5.87%,
which are among the most actively traded on the Nasdaq, ran up 5.6%, and have rocketed 35.3% amid a four-day win streak.

On Monday, the ADS shot up 14.8% after JP Morgan upgraded the streaming -video company, as well as a number of other China-based internet companies, as recent “significant uncertainties” have started abating on the back of recent regulatory announcements.

Alibaba Group Holding Ltd.’s ADS BABA,
+4.38%
got a 4.4% bump in midday trading. JP Morgan’s Alex Yao pulled a bullish about-face on the ecommerce giant, double upgrading it to overweight from underweight on Monday, as he believes historically low valuation offers “attractive risk/reward” in an improving macro environment.

Among other companies Yao double upgraded on Monday, the US-listed shares of Tencent Holdings Ltd. TCEHY,
+3.39%

700,
+5.26%
rose 3.2%, Meituan MPNGY,
+3.60%

3690,
+6.24%
advanced 3.2%, Pinduoduo Inc. PDD,
+4.73%
ran up 4.9%, NetEase Inc. NTES,
+0.73%

9999,
+6.40%
gained 0.3% and Dingdong Ltd. DDL,
+2.23%
jumped 2.7%.

JD.com Inc.’s ADS JD,
+2.70%
charged up 1.6%, and was also one of the most active on the Nasdaq, after the ecommerce company reported earlier Tuesday first-quarter profit and revenue that beat expectations by wide margins. The company was also upgraded by Yao, who raised the rating to neutral from underweight.

Elsewhere, share of Baidu.com BIDU,
+3.74%
rose 3.0%, Bilibili Inc. BILI,
+1.65%
gained 2.7% and Vipshop Holdings Ltd. VIPS,
+2.64%
tacked on 3.4%.

Outside of tech, the ADS of education companies were also broadly higher, with TAL Education Group TAL,
+3.14%
rallying 4.4%, New Oriental Education & Technology Group Inc. EDU,
+3.29%
rising 4.2% and Gaotu Techedu Inc. GOTU,
+2.22%
adding 3.0%.

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Credit: www.marketwatch.com /

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