Chinese tech stocks sunk lower this week in the midst of the ongoing regulatory crackdown coupled with recent news of Didi’s delisting plans, leading some global banks to call «overdone» on the correction and a possible bottom.
Citi and UBS said the correction on Chinese companies’ American depositary receipts is now excessive in light of the further market downturn following news of Didi’s delisting plans, reportedly at the request of the mainland’s cybersecurity watchdog.
«We would view the selloff as a buying opportunity for those big-cap American depositary shares that already have dual-listings in HK,» said head of Pan-Asia internet research at Citi's global markets unit Alicia Yap.
She also called the Didi delisting an «isolated case», adding that the «risk of other ADRs de-listing could materialize by 2025».
UBS: «Limited Visibility»
UBS also called the correction «overdone» as investors overreacted to the Didi news.
«Investors have overreacted over limited visibility on future policy, fragile risk sentiment, and an imperfect understanding of fungibility,» said UBS Global Wealth Management CIO Mark Haefele.
Meanwhile, a growing number of banks elsewhere are calling for more caution, including HSBC and Pictet, advising investors to take a wait-and-see approach particularly with regards to achieving greater clarity on regulatory developments and its impact to earnings.
