Tech investors bullish on investing in China again

Tourists watch a dragon dance to celebrate the Lunar New Year of the Rabbit at a tourist spot on January 30, 2023 in Kunming, Yunnan province, China.

Liu Ranyang | China News Service | beautiful pictures

Tech investors say the worst is over as China reopens and withdraws from its Covid-free policy.

“I think the government has a clear signal on what it hopes to do next year,” said Chibo Tang, managing partner at Gobi Partners, an early-stage media and technology investment firm. growth in gross domestic product, employment and domestic consumption”. companies in China.

In December, the Chinese government pledged to raise domestic consumption and boost growth by 2023. China’s economy will grow only 3% in 2022 – well below the official target – weighed down by tough Covid restrictions and a slump in the property market.

“There will be pent-up consumption in China. There may be some inflation because of this but overall the outlook will be upbeat,” said Tay Choon Chong, managing partner at Vertex Ventures China. .

The firm raised nearly $500 million for a new Chinese tech fund is scheduled to close early this year – $400 million more than previously planned.

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“When we raised funds last year, it was in the middle [China’s] political changes but we are optimistic because we see that the government will focus on economic development, and that is the basis,” Tay said.

“China has all the ingredients needed for successful investment,” Tay said, adding that China has a talented pool of “educated, hungry and hardworking people.” .

Tech companies get government support

Investors are not worried about new challenges on the regulatory front.

Beijing recently granted access to a US accounting watchdog, helping to resolve an audit dispute that threatened to delist Chinese companies from US exchanges. China also continue to approve licenses for imported games and approved a new funding into a large fintech company.

James Tan, managing partner at Singapore-based Quest Ventures, said: “If there is any caution, it will be due to the possibility of new strains of Covid, not the possibility of government suppression. pressure or regulatory constraints because that happened before Covid.”

Morgan Stanley said in a report that China’s Central Economic Work Conference clearly promote the role of platform companies in driving economic growth and creating job opportunities.

“This shows that Big Tech regulation has entered a stable and institutionalized phase, and we no longer expect strong, new measures,” the report said.

Gobi’s Tang said: “I really think they will do everything they can to try to boost economic growth. It would be surprising if more regulations were put in place to prevent that, because it would a very opposite signal.”

Chinese tech shares have rallied this year with Alibaba up 19%, Tencent up 18%, Baidu up 26% and NetEase up 21%, as of the end of Monday.

“We did not recommend naming on the Internet for a long time, from January 2021 to the end of December,” said Laura Wang, managing director and head of China equity strategy at Morgan Stanley. 2022, especially with the skepticism surrounding the Internet.” , in an interview with CNBC on January 17th.

Morgan Stanley says we're even more bullish on China stocks

“But we believe now is the time to get back there. The Internet sector is actually highly correlated with overall consumption growth in China, and we know that’s about to happen after a rebound.” pandemic,” Wang said.

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