Gold is 2025’s best performer. UBS sees more upside
Investing.com -- Analysts at Capital Economics assessed the question regarding China’s tech rally and whether it has run out of steam in a note Wednesday, telling investors they believe it could continue further.
“We think China’s tech stocks could rally a bit further yet and perhaps outperform those globally for a while,” stated the firm.
Capital Economics noted that the “breakneck rally” in China’s tech stocks has come to a halt lately, noting that they previously made up a lot of ground lost on global peers during the previous AI-fuelled tech rally.
Even so, they note that the valuations of China’s tech companies are still very low by global standards.
This is put down to the various crackdowns by Chinese authorities on large domestic companies during the post-COVID period. They added that it is now not surprising to see the policy stance has shifted to a more supportive one.
Overall, these Chinese tech companies “might fare well if global enthusiasm around AI picks back up, now investors have seemingly been persuaded to take China’s role in the global AI race seriously,” said Capital Economics.
The firm feels that domestic developments in China will “at least be as important, and a potentially strong tailwind for these stocks, despite the fact that valuations suggest investors remain slightly more cautious.
“For note, our sense is that China’s tech companies could ride a wave of investor enthusiasm for a while longer yet,” concluded Capital Economics.