OREANDA-NEWS. Shares of Chinese companies traded on US exchanges showed a sharp rise at the end of the year.
The NASDAQ Golden Dragon China Index, which tracks 98 major Chinese companies listed in the US, rose 9.4 per cent in year-end trading on December 30, the most marked rise since 2008, Bloomberg reported.
"It's finally time to buy Chinese stocks,"- said Vital Knowledge analyst Adam Crisafulli. He added that the NASDAQ Golden Dragon Index has returned to levels that have served as solid support over the past few years.
However, investors should exercise caution as potential uncertainties in government regulation remain, said Matt Maley, chief market strategist at investment firm Miller Tabak. "While the New Year should ease the selling pressure, there remains too much uncertainty for US investors to return to these stocks,"- he said.
Despite the one-day rally, Chinese stocks in the US are down around 42% in 2021 and are around 57% below February's highs. Chinese stocks have faced a sharp collapse in 2021 due to pressure from Chinese and US regulators. The Chinese market has lost more than $1 trillion since February 2021.
The Chinese government has tightened regulation on high tech, education, real estate and video games. Authorities have restricted playing time for minors and suspended licensing of new video games, tightened requirements for personal data protection and restricted IPOs and foreign funding for online education platforms and tutoring companies. Major technology companies have faced investigations over alleged abuses.
Alibaba was fined a record $2.8 billion as a result of the antitrust investigation. Alibaba shares fell more than 50%, Tencent lost about 46% and education company TAL Education lost nearly 95%. Tencent Holdings and Alibaba lost their place in the world's top 10 companies by market capitalisation at the end of 2021.
In 2022, the Chinese government may require companies to register with the China Securities Market Regulatory Commission (CSRC) for IPOs and additional sales of shares abroad. The PRC could also ban foreign listings for companies significant to national security and restrict participation by foreign investors.
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