UBS Shares Surge 3.17% as Foreign Investors Eye Chinese Internet Giants
1min read In the trading session on March 7, ubs shares climbed by 3.17%, reflecting a positive market response to its recent performance. This surge can be dissected through a variety of contributing factors that have fueled investor confidence in the institution's strategy.
Recent UBS research highlights a growing enthusiasm among foreign investors towards Chinese internet giants, driven by several key influences. Notably, supportive domestic policies towards tech enterprises are gaining traction, reinforced by recent discussions among private entrepreneurs which have instilled market confidence. The rise of generative artificial intelligence as a new growth catalyst for the internet sector also draws attention, with investors prioritizing AI's long-term prospects over immediate macroeconomic disruptions. Additionally, the relatively low valuation of the Chinese internet sector entices foreign funds to reallocate their assets.
The report identifies a subtle shift by European and emerging market long-term funds from being under or neutral to slightly overweight in the Chinese internet sector, with hedge funds also engaging, particularly in large-cap companies. Although global funds exhibit relatively low interest in the Chinese internet sector, UBS perceives this as a potential for significant expansion opportunities ahead.
On the corporate front, alibaba remains a focal point for investors, who are particularly interested in the sustainability of its customer management revenue, growth in its cloud business, and valuation uplift potential. UBS anticipates Alibaba's customer management revenue to maintain a steady 7-8% growth rate, supported by increased service fees and the introduction of new marketing tools. Meanwhile, Alibaba Cloud's revenue growth is expected to accelerate to 20-25%, although AI capacity development and demand timing discrepancies might compress EBITA margins. Despite these challenges, Alibaba is regarded as one of the world's most attractively valued AI giants.
Tencent also captures significant investor interest, owing to its robust gaming business, the e-commerce potential of its WeChat mini-program store, and AI monetization capabilities. However, the risk of U.S. investment restrictions remains a primary concern for long-term investors.
Overall, UBS's analysis suggests a favorable environment for foreign investment in the Chinese internet sector, supported by appealing fundamentals and strategic policy support. Nonetheless, inherent market risks necessitate a cautious approach, urging investors to thoroughly assess their financial positions and investment goals.