Chinese Assets Soar: Funds Increase Holdings by 10x

During this period, U.S. stocks have experienced a significant plunge, and gold, as a safe-haven asset, has also dropped to the $1,800 level.

Conversely, Chinese assets have shown the greatest resilience amidst this turmoil.

Taking the NASDAQ Golden Dragon China Index as an example, it has risen from 6,147 points on April 21st to 6,403 points yesterday, showing an increase of 4.16%. The NASDAQ Index closed at 13,174 points on April 21st and closed at 11,984 yesterday, with a decline of 9% over the same period.

Why have Chinese assets suddenly become favored?

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The shift in investor sentiment stems from two direct reasons:

1. In just the past two months, international investment banks have undergone a dramatic change in their views on Chinese concept stocks. In March of this year, JPMorgan Chase still believed that these stocks were not worth investing in, but now it has simultaneously raised the ratings and target prices for many Chinese concept stocks.

2. The disclosure of all U.S. stock 13F reports has ended, and the data shows that Wall Street giants have already started to bottom-fish for Chinese internet giants.

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Since the second half of last year, Chinese internet giants facing the challenge of declining performance have unsurprisingly seen a decline in market value. However, crises often breed opportunities, and after a significant drop for more than half a year, the dawn is now arriving.

Valuation will determine the cost of investment. This time, the valuation of Chinese internet giants has fallen sharply, highlighting cost-effectiveness. The Chinese internet industry is shaking off various uncertainties, and thus will be driven by short-term and long-term fundamental factors, with the stock prices of leading companies potentially exceeding expectations in the future.The ability to continuously create value in the future determines the long-term profit space. The intrinsic value of a stock is the discount of all future free cash flows. From the latest financial reports, there are no obvious problems in the fundamentals of the latest quarter, and the profitability is robust.

The business models of internet giants often mature gradually in fierce competition, not only improving the efficiency of social operations but also continuously creating social value, and their intrinsic value will eventually return.

On the other hand, regulatory news has also relieved investors and filled them with expectations for the future.

The country has not only once released important signals on the development of the "digital economy". In February this year, the first document related to the digital economy plan was released, with the goal of reaching 10% of the gross national product by 2025, entering a comprehensive expansion period.

Then, in April, the high-level meeting emphasized the need to promote the healthy development of the platform economy, complete rectification, implement normalized regulation, and introduce specific support measures.

In May, the meeting once again pointed out the need to introduce specific support measures for the platform as soon as possible.

At present, the previous anti-monopoly and anti-capital disorderly expansion have achieved obvious results, and the future is a good development period for the platform economy. In the next stage, three new characteristics will be reflected: 1. Normalization of regulation; 2. Maintain a certain speed, but the quality of development becomes particularly important; 3. In addition to market attributes, other platform operators will show a certain public attribute.

Under such a clear positioning, the future stock price of internet giant companies has reduced a lot of uncertainty.Although in the past period, the stock prices of many tech giants have fallen significantly, investors should not lose confidence at this time.

In March this year, JPMorgan Chase had significantly lowered the ratings and target prices of related stocks. Similar rumors and actions may have undermined the confidence of many investors, leading them to decide to cut their losses and leave the market.

However, recent data shows that in March, a fund under JPMorgan Chase significantly increased its holdings of Chinese Internet stocks, among which the position in JD.com increased by 12.5 times, becoming the fourth largest holding stock of the fund.

In addition, Tencent and Meituan also received different amounts of increased positions.

Perhaps because the construction of the position was completed, just two days ago, JPMorgan Chase released new news, significantly raising the target price of Chinese concept stocks, and raising many stocks to be overweight.