Investors may be able to regain confidence in Chinese tech stocks since more than 100 Chinese companies, including Alibaba and Baidu, have avoided being banned from U.S. stock exchanges.
This week The U.S. accounting watchdog said they had obtained complete access to reviews of financial statements for these Chinese firms.
Policy support could help in boosting growth for these businesses. China has committed to boosting domestic consumption as it moves towards increasing growth after removing the Zero Covid policy.
Investors might regain the confidence to invest in Chinese tech stocks, as the companies can avoid being delisted from U.S. stock exchanges and the Chinese government has pledged to support the policy, according to an investment manager.
This week, the U.S. accounting watchdog, the Public Company Accounting Oversight Board, announced that it was granted the right to investigate and inspect Chinese businesses in the very first instance following China finally granted access to the U.S. access in August.
Over 100 Chinese tech firms like Alibaba, Baidu, and JD.com were at risk of losing their listing in the U.S. in 2024 if their audit data was unavailable for PCAOB inspectors.
Investors often struggle with an absence of transparency regarding Chinese shares.
“It allows institutional investors to return. Professional investors were very frightened of this risk of delisting and that’s why they’ve kept their distance,” Brendan Ahern, a chief investment officer of U.S.-based investor KraneShares, spoke to CNBC’s “Squawk Box Asia” on Wednesday.
In September. 30th on the 30th of September, the number of Chinese companies listed as of Sept. 30 on U.S. exchanges with a market capitalization total of $775 billion, per the U.S.-China Economic and Security Review Committee.
“With that risk going away based on the PCAOB announcement, you are going to see investment dollars flow back into these names,” Ahern said. Ahern.
“These internet giants are where investors want to invest when it comes to China,” Ahern said. Ahern.
He also noted that it’s “early days, weeks, months to see that capital return into the space.”
However, he also said that policy support could help accelerate growth for these firms. This week China promised to boost domestic consumption in the coming year, expanding its economy after having ended its zero-Covid policies.
“2023 is a year where we are going to have a lot of government policy support, such as raising domestic consumption,” Ahern said. Ahern. “About 25% of all retail sales go through the companies.”
“The Chinese government needs these internet companies, which explains why we have seen a backing off on some of the regulatory scrutinies we experienced in 2021,” Ahern said. Ahern.
Bill Gross says markets are heading for “potential chaos” as interest rates continue increasing. Investment
The famous investment expert Bill Gross said he expects serious trouble ahead if it is that the Federal Reserve keeps hiking interest rates.
“The economy has been bolstered by tremendous amounts of trillions of dollars in fiscal spending, but ultimately when that is used up, I think we’ve got a mild recession, and if interest rates keep going up, we’ve got more than that,” Gross declared Wednesday on the CNBC’s “Halftime Report.”
“We’ve got potential chaos in financial markets,” the economist declared.
A tightening of the monetary policy will cause more turmoil in the markets for capital, according to Gross. “The bond king,” co-founder of Pimco, highlighted Tuesday’s shift in bond yields across the world due to the Bank of Japan’s decision to raise the yield on the ten-year Japanese Treasury bond.
A rise in interest rates could spell trouble in commercial property, which may be facing “potential defaults” ahead, Gross stated. He believes, however, homeowners to be slightly better and not be impacted to the same extent as they were when it was hit during the Great Recession.
“I do think, going forward, if the Fed continues to raise rates, that the ability to equitize some of your housing, which is moving down in price, is going to be severely limited, and so that’ll serve as a caution for the housing market,” Gross stated. “But in terms of a debacle, as in ’07, ’08, I don’t think we’re headed there.”
When he was at Pimco, Gross helped run the largest mutual fund in the world. Gross then managed an investment fund for Janus Henderson until his retirement in March 2019.
Read more: Sam Bankman-Fried, the founder of FTX, will likely suspend extradition to the Bahamas in Nov 2022.
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