Two month after saying Chinese tech firms were “uninvestable”, JP Morgan has upgraded ratings many of them, including Tencent Holdings (HKG:0700, OTC:TCEHY) and Alibaba Group (NYSE:BABA).
The US investment bank’s analysts hiked their ratings to “overweight” from “underweight”, with the list of companies also including Meituan, NetEase and Pinduoduo.
On 14 March, the analysts called the sector “uninvestable”, downgrading Chinese internet stocks to ‘underweight’, with the list including giants most of the above names.
One of the reasons for the former bearish stance was China’s zero-tolerance "dynamic zero-Covid" approach, which aims to contain each outbreak as soon as it appears and resulted in lockdowns in Shenzhen, Shanghai and many other areas.
But markets in Asia have crept higher after Shanghai recorded a third day of no Covid-19 cases outside of quarantine facilities.
The were repercussions were most obviously felt in London’s FTSE 100 by Scottish Mortgage Investment Trust PLC, where the shares were lifted 1.5%.
Tencent is the fifth biggest shareholding in the SMT portfolio, with Alibaba and Meituan also among its top 10 holdings.
The growth-focused investment trust’s shares this month fell below 750p for the first time since June 2020.