China, US tech shares rally throughout the week thanks to different drivers

Tech Stocks in China and the United States are emerging, albeit for different reasons. In China, a deal between Washington and Beijing over their long-running audit dispute sent Chinese tech stocks up as their listings in the US appeared to be protected.

Meanwhile, in the US, investment funds are betting big on large-cap tech stocks with confidence levels approaching levels not seen since before the pandemic sell-off.

US and China Access Agreement through Audit

The MSCI Asia Index outside Japan jumped from around 513 before the Washington-Beijing deal was announced to around 526 after the deal. Meanwhile, the NASDAQ China Golden Dragon Index has gained 12% in the last 5 trading sessions on news that a deal is imminent, after the formal agreement is solidified.

U.S. listed shares of Alibaba Group Holding Ltd (NYSE: BABA) is up 14% over the past five days, while US-listed stock is up 18% over the past five trading sessions. Pinduoduo has gained 29% in the same time frame.

The landmark agreement allows regulators in the US to review audits of Chinese companies listed on US stock exchanges, preventing mass delisting of all Chinese companies. Chinese companies listed in the US. Negotiations on this issue have dragged on for more than 10 years.

The agreement gives the Public Company Accounting and Oversight Board (PCAOB) the power to select companies, commitments and possible violations that it will scrutinize without oversight. of Chinese officials. China has not allowed regulators from outside its borders to review audits of Chinese companies, arguing that it is necessary to protect national security.

SEC Warns That “Evidence Will Be In The Pudding”

Five Chinese state-owned companies said earlier this month that they would choose to delist their shares from stock exchanges in the US before being forced off the exchange in 2024 due to a pending ban. handle. Despite the deal, regulators in the US expressed caution about whether they could successfully enforce it.

In one statement, the Securities and Exchange Commission stressed that the framework laid out in the agreement is “just one step in the process”. SEC Chairman Gary Gensler added that it would “only make sense if the PCAOB can actually inspect and fully investigate” Chinese companies that audit Chinese companies.

If PCAOB is unable to do so, about 200 Chinese companies will be banned from US stock exchanges if they continue to use those auditing firms.

Hedge funds raised on Mega-Cap . tech names

In the US, hedge funds helped boost the Nasdaq Composite by 9% and the Nasdaq 100 by nearly 8% last month as they loaded the mega-cap. technology stocks. Goldman Sachs said in a recent report that hedge funds have reduced their overall holdings and increased the focus of their portfolios by focusing on the most persuasive names of investors. surname.

The company also said the average weighting of the top 10 stocks among hedge funds in the second quarter rose to 70%, the highest concentration since Q1 2020. In fact, Goldman said confidence News has increased to levels not seen since the beginning of the year. epidemic. Furthermore, position turnover among hedge funds fell to an all-time low of 23%.

Hedge funds have added to their positions in the technology and consumer discretionary sectors while cutting their holdings in the energy and materials sectors. According to Goldman Sachs,, Inc. (NASDAQ: AMZN) has replaced Microsoft Corporation (NASDAQ: MSFT) as the preferred long position among hedge funds. Fund managers also strengthened their positions in NVIDIA Corporation (NASDAQ: NVDA), Apple Inc (NASDAQ: AAPL), Tesla Inc (NASDAQ: TSLA) and Atlassian Corporation PLC (NASDAQ: TEAM).

Originally published on ValueWalk. Read Here.

Featured image credit: Photo by Anna Nekrashevich; Bark; Thank you!


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