China Tech Crackdown Cycle Nearing an Finish, Prime Fund Supervisor says

Beijing’s antitrust crackdown on homegrown tech giants may be coming to an end, leaving stock valuations of some of the major firms at attractive levels.

That’s the view of Hyomi Jie at Fidelity International Ltd., whose China consumer equity funds oversee $7.3 billion in assets. One has beaten 96% of peers in the past year. Hong Kong-based Jie sold some of her holdings in Alibaba Group Holding Ltd. and Tencent Holdings Ltd. earlier in the year, though they remain among her largest positions.

“What we can think about is whether we are in the start of this cycle, this regulatory pattern cycle, or we are closer to the end of the cycle,” said Jie. “I have a view that we are closer to the end of the cycle.”

While probes of billionaire Jack Ma’s Alibaba and Ant Group Co. took three to four months, a second batch of investigations into firms such as Tencent and Meituan may proceed more quickly, indicating that the regulatory cycle could be wrapping up as key players in the industry have agreed on what needs to be done, according to Jie.

She isn’t alone in noting the appeal of valuations of shares such as Alibaba and Tencent now, with buy recommendations from analysts dominating for those stocks, according to Bloomberg-compiled data.

Hang Seng Tech Index has slumped over 25% since February peak

China’s rapid-fire moves to curb anti-competitive practices by more than 30 technology firms have rattled investors, leaving them uncertain about the prospects of once-adored industry favorites. Shares of internet titans such as Alibaba and Tencent have fallen about 20% from their recent peaks, driven also by a global tech selloff.

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