U.S. stocks showed signs of a potential bounce on Tuesday morning, albeit a modest one. Stock index futures were up as much as a third of a percent shortly before the regular trading session began on Wall Street.

One factor that has weighed on investor sentiment recently has been the ongoing battle that the Chinese government has waged against the COVID-19 pandemic. China has been a lot more stringent with its lockdown measures to stem the potential spread of the disease, and that has raised concerns about how much downward pressure the government's actions could have on economic activity. With Chinese citizens now starting to protest lockdowns and other restrictions, the prospects for eliminating the zero-COVID policy in favor of a more lenient alternative are giving many well-known stocks in China a boost on Tuesday morning.

What China could do

Investors in Chinese companies got more comfortable after hearing comments from China's National Health Commission (NHC). The governmental body said that it would make a greater effort to provide COVID-19 vaccinations for its elderly population, aiming to protect those over 80 and making booster shots available sooner after primary vaccinations. The NHC is also looking to launch a campaign to convince those who are reluctant to get vaccinated that the benefits of COVID-19 vaccines outweigh any perceived downsides.

Interestingly, the reaction to recent protests in China has been mixed. At first, investors feared that the Chinese government would crack down on protestors with COVID-19-related measures that could be stricter than current guidelines. However, more market participants seem to view the protests as potentially having a positive influence in persuading government officials to loosen their zero-COVID policy.

That's a big part of why some major Chinese stocks moved higher in premarket trading Tuesday morning. Alibaba Group Holding rose 5%, matching gains from electric vehicle companies Li Auto and XPeng. Baidu climbed 6%, while JD.com moved 7% higher.

Solid earnings from Bilibili

Also boosting sentiment on Chinese stocks, Bilibili (NASDAQ: BILI) released its latest quarterly results on Tuesday, and the stock climbed 10% in response. The online gaming and digital media company reported solid gains in the third quarter, including an 11% rise in revenue year over year to $814.5 million. Net losses narrowed by 36% from year-ago levels to $241 million as Bilibili reported a 25% rise in daily active users to 90.3 million. Almost 333 million people now use the service on a monthly basis, and while less than 10% of those users actually pay for a premium subscription, Bilibili reported high levels of engagement.

Shareholders were pleased to see Bilibili responding proactively to macroeconomic threats. Already, Bilibili's numbers are reflecting more efficient operations, as gross margin improved and expenses for sales and marketing fell as a percentage of total revenue. The company anticipates continuing to control its costs strictly, with an eye toward unlocking even more savings as it aims to become consistently profitable as soon as it can.

More hurdles ahead

COVID-19 is only one of the factors that have weighed on Chinese stocks in recent years. Turbulent foreign relations between China and the U.S. have led to volatility, while structural aspects of the Chinese economy have introduced systemic risks for investors to consider. Talk of potentially delisting Chinese stocks has quieted in Washington, but it could come back in 2023 and beyond.

Nevertheless, progress toward moving beyond the zero-COVID policy seems to be giving investors more comfort in investing in Chinese stocks. Those who are comfortable with the risks could find interesting opportunities in China. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Chinese stocks are soaring. Here's why appeared first on The Motley Fool Australia.

What happened

Chinese stocks were skyrocketing across the board Wednesday on news that Beijing may be reversing course on its regulatory crackdown after China's economy grew by just 4% in the fourth quarter and stock prices there have plunged. The crackdown was part of China's "common prosperity" campaign, which is intended to boost both social equality and central government control, sometimes at the expense of the nation's most successful companies.

However, with more than $1 trillion in value having been sapped from Chinese stocks and Hong Kong's Hang Seng Index at a six-year low, and with geopolitical tensions simmering due to Russia's invasion of Ukraine, Beijing now seems ready to pivot. Vice Premier Liu He said the government would support the economy and keep markets stable -- welcome reassurance to investors who have seen their portfolios shrink as regulators have levied a series of fines and restrictions on some of China's best-known tech companies. Liu said the government should "actively introduce policies that will benefit markets."

In other words, investors seem to believe that Beijing has decided to switch roles, transforming from an impediment to stock market growth into a supporter of it. That view sent Chinese stocks soaring, especially in the beaten-down internet sector.

At the same time, a Chinese securities regulator said Wednesday that it was in communication with its U.S. counterparts with the goal of reaching an agreement on auditing supervision rules that could defuse the threat of a wave of stock delistings.

Among the winners Wednesday were 51Job (NASDAQ: JOBS), which was up 11.8% as of 12:44 p.m. ET; iQIYI (NASDAQ: IQ), which had gained 42.9%; Baozun (NASDAQ: BZUN), which rose 19.1%; Hello Group (NASDAQ: MOMO), which jumped 45.8%, and Bilibili (NASDAQ: BILI), which climbed 39.6%. At the same, the Kraneshares CSI China Internet ETF (NYSEMKT: KWEB), which counts tech giants like Alibaba and Tencent and JD.com as its biggest holdings, soared by 29.5%, reflecting the boom across the sector. 

So what

There was no news out on any of these companies specifically on Wednesday, but China's regulatory crackdown has been taking a steep toll on their stock prices. Even though they haven't faced direct effects from the intensified regulatory environment that has prevailed in China recently in the ways that larger companies like Alibaba have, those tighter regulations have impacted that nation's economic growth and the performance of these businesses.

For example, in its fourth-quarter earnings report last week, e-commerce services provider Baozun reported a decline in revenue despite an increase in gross merchandise volume, which the company blamed in part on larger economic issues in China such as "weaker consumption sentiment" and a "weaker macro environment."

Hello Group, which operates internet dating sites Momo and Tantan, said revenue was essentially flat year over year in its most recently reported quarter, though the pandemic may be the biggest challenge facing that company. Bilibili, an online video entertainment platform, has seen its growth rate slow, but it's still expanding briskly with revenue up 51% to $907.1 million, making the stock a good candidate for recovery as it's still down 80% from its all-time high.

51job, which operates a job recruiting site, said its revenue growth clocked in at 19% in its most recent quarter, though it noted headwinds from the pandemic and related restrictions. Chinese video streaming service iQIYI also reported flat revenue in its latest quarter, and cited a challenging macroeconomic environment for its 10% decline in advertising sales, though the company's problems predate the regulatory crackdown in China.

Now what

Wednesday's announcement from the Chinese government is a significant step, and should help alleviate what has been the biggest burden on China's tech sector over the past year. However, these stocks are still facing other challenges. Those include the delisting threat in the U.S., which gained new urgency after the SEC cited five specific Chinese stocks at risk of removal from U.S. exchanges by the end of the month; the pandemic, a fresh outbreak of which recently led the Chinese government to impose lockdowns in Jilin province and the city of Shenzhen -- a massive tech manufacturing hub -- for at least a week; and the broader slowdown of the Chinese economy, which may take more than government action to reignite.

Still, many of these stocks are undervalued compared to their historical levels, and with the Chinese government seemingly prepared to be friendly to its domestic companies, strong performers like Bilibili could soar again. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Chinese internet stocks were soaring today appeared first on The Motley Fool Australia.

What happened

After days of panic-selling, a wide range of Chinese stocks staged a broad relief rally on Wednesday. Many of the stocks had fallen to 21-month lows, as investors worried about a resurgence of the pandemic in China, an ongoing regulatory crackdown, and the Chinese government's stance on the war raging between Ukraine and Russia. While there wasn't any company-specific news, these stocks came roaring back after government officials vowed to boost economic growth and stabilize the markets. 

Shares of Alibaba Group Holding (NYSE: BABA) gained as much as 27.8%, JD.com (NASDAQ: JD) climbed as much as 33.1%, and Didi Global (NYSE: DIDI) surged as much as 51.1%. The trio were still trading higher, up 26.3%, 30.4%, and 50%, respectively, as of 12:45 p.m. ET. 

So what

China's Vice Premier Liu He, the country's top economic advisor, said Beijing would take substantial steps to "boost the economy in the first quarter," while also introducing "policies that are favorable to the market." The comments came in the wake of a special session of the State Council's Financial Stability and Development Committee. The committee has oversight of China's financial and securities regulators. 

The country has faced numerous headwinds in recent months, which have weighed heavily on investor sentiment and driven Chinese stocks to their lowest level in years. The Nasdaq Golden China Dragon Index, which tracks a collection of popular Chinese stocks, plummeted 12% on Monday alone, its largest one-day decline in more than two decades. The index had also plunged 25% over the previous four trading days, as investors worried about multiple challenges facing Chinese companies. 

In recent weeks, China has been struggling to contain a resurgence of COVID-19 infections, as the number of cases recently topped a two-year high, forcing the country to initiate new, stringent lockdowns. There are restrictions in more than 11 cities and counties in the world's most populous country, including the population centers of Shenzhen and Shanghai, and China has restricted travel and closed non-essential businesses to combat the latest outbreak.

Adding to the uncertainty, U.S. regulators have taken steps to kick a number of Chinese stocks off U.S. exchanges. The Securities and Exchange Commission (SEC) has identified five companies that could be delisted following the passing of legislation that requires Chinese companies to submit their audit records for review by U.S. regulators. 

Finally, news reports from earlier this week suggested that Russia had requested military and financial assistance from China in the wake of the country's war against Ukraine. The U.S. has imposed strict sanctions against Russia in response to the unprovoked invasion, battering its economy. Investors are concerned that a backlash would no doubt ensue if China were to back Russia, whose actions have been condemned by the majority of the free world. 

Now what

The statements by Chinese government officials were welcomed by investors, resulting in more bullish sentiment on Wall Street. 

U.S. Tiger Securities analyst Bo Pei upgraded the China internet sector to outperform (buy) from neutral (hold), positing the sector's biggest ongoing risks are already priced into the beaten-down stocks, which have fallen dramatically in recent weeks and months. Alibaba, JD.com, and Didi Global were all cited in the upgrade. Pei also cited recent reports that suggest regulators from both the U.S. and China have been in talks and are making headway toward finding a mutually agreeable solution to the potential delisting of Chinese stocks from U.S. markets.

The recent headwinds facing Chinese technology stocks may persist, so investors should watch for further developments in these areas. That said, the willingness of China's government regulators to address the situation was welcomed by investors, helping push these stocks up from their recent lows. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Alibaba, JD.com, and Didi stocks rocketed higher on Wednesday appeared first on The Motley Fool Australia.

What happened

After Chinese tech stocks plunged sharply last week, the rout continued on Monday with several notable names falling by double-digit percentages -- among them, JD.com (NASDAQ: JD), Hello Group (NASDAQ: MOMO), Baozun (NASDAQ: BZUN), iQIYI (NASDAQ: IQ), and Zhihu (NYSE: ZH).

Once again, several different news items contributed to the negativity powering the sell-off.

First, news outlets reported over the weekend that Russia had asked China for military assistance in its invasion of Ukraine, and economic aid to combat the harsh sanctions Western countries have imposed in response to it. It's unclear what China will do, but if that nation provides material aid to Russia, it could lead the U.S., European nations, and other countries to impose sanctions on China, which would further squeeze its economy at a vulnerable time.

Additionally, China is shutting down the tech manufacturing hub of Shenzhen for at least a week to combat a COVID-19 outbreak. That may not hurt the stocks above directly, but it adds to the supply chain and geopolitical concerns that may drive some manufacturing away from China. If that becomes a trend, it would weigh on the Chinese economy.

Finally, Tencent, owner of the super app WeChat and one of China's biggest tech companies, looks to be facing a large fine for violations of China's anti-money-laundering rules, showing Beijing's regulatory crackdown isn't over. Last week, Chinese tech stocks as a group also fell after the Securities and Exchange Commission said it would delist five Chinese companies from U.S. stock markets by the end of the month if they didn't cooperate with U.S. auditing disclosure rules.

On Monday, as of 11:50 a.m. ET, JD.com was down by 8.2%; Hello Group was off 17.7%; Baozun had fallen 12.5%; iQIYI had lost 20.5%, Zhihu was down 28.6%, and the KraneShares CSI China Internet ETF (NYSEMKT: KWEB), which holds a basket of Chinese tech stocks, was down by 8.6%.

So what

In addition to the macro news, JPMorgan Chase downgraded several Chinese tech stocks Monday morning. Analyst Andre Chang double-downgraded JD.com, China's largest direct retailer, from overweight to underweight, and slashed his price target from $100 to $35. The move was largely in response to valuations falling in the sector, but he pointed to possible headwinds from a tougher macroeconomic environment. JD.com reported solid fourth-quarter numbers last week, but the stock still fell as its revenue growth was the slowest it had been in six quarters, and as investors reacted to the news about the delisting threat to Chinese companies. 

Zhihu, which operates an online question-and-answer platform similar to Quora, reported Q4 earnings Monday morning. It was another quarter of strong growth, with revenue jumping 96% to $160 million.  On the bottom line, the company narrowed its adjusted loss from $0.30 per share to $0.10 per share. However, that came up short of estimates -- analysts had been expecting a loss of $0.08 per share. Despite the strong growth, JPMorgan double-downgraded Zhihu in the same way it did JD.com, and gave it a price target of $1.80.

JPMorgan also hit Baozun with a double-downgrade and cut its price target to $5. Those moves came after the e-commerce services provider reported declining revenue and a smaller profit in its fourth-quarter report last week. 

Finally, iQIYI, the Chinese video streaming company sometimes compared to Netflix, was double-downgraded by JPMorgan, which lowered its price target from $8 to $2 based on market sentiment reasons.

Hello Group, which owns the online dating sites Momo and Tantan, only got a one-level chop from JPMorgan. The investment bank lowered its rating on Hello from overweight to neutral with a price target of $7, citing low business visibility for its leading brands.

Now what

There's no telling if or when the bloodbath in Chinese tech stocks will end; there are several reasons why investors are fleeing the sector, and any of them could persist. If there is a comeback, I'd expect it to be led by stocks like JD.com, a large, established growth company that has thus far avoided drawing the ire of the Chinese government.

But with even stocks like JD.com getting hammered over the last few days, investors are probably best off waiting for things to settle down in China's tech sector before putting money into it. There's a good chance things will get worse before they get better. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Chinese tech stocks were tumbling again today appeared first on The Motley Fool Australia.

At the time of writing, shares in the nearly billion-dollar company are trading at $2.69, 15% above its previous close.

What's moving the Cettire share price today?

Cettire shareholders have been given a reason to celebrate today as the company looks to extend its grip on the luxury retail market.

According to its announcement, Cettire is laying down plans to break into the Chinese online luxury market. To do this, the company will be partnering up with e-commerce behemoth JD.Com Inc (NASDAQ: JD). For context, JD.com has more than 550 million active customers.

In the announcement, Cettire explained that the partnership would leverage the two e-commerce companies' strengths. This would include customers gaining access to Cettire's selection of luxury items. Meanwhile, JD.Com will drive traffic and brand awareness.

JD.Com's extensive network also means Cettire has an opportunity to utilise the Chinese company's local logistics capability. Considering the Cettire share price today, shareholders are seeing this as a major positive for the company.

Unsurprisingly, investors are rubbing their hands together today on the potential market opportunity. The metrics cited in Cettire's announcement suggest mainland China will be the world's largest market for personal luxury goods by 2025 — with a potential market size of A$150 billion.

Highlighting this, Cettire CEO Dean Mintz stated:

Our entry into China is a significant milestone towards our goal of being the world's largest luxury destination. China represents a vast market opportunity and it is core to our strategy to make our world class proposition available to additional markets. Today's announcement is another step in our strategic journey to achieve this goal.

What else?

To facilitate the expansion, Cettire has been pulling together a local talent pool in China. This pool emphasises world-class engineering talent. Already, a number of senior technology roles have been filled late last year.

Additionally, local recruitment is being considered important for developing features specific to the region. For instance, Cettire plans to launch Chinese language websites across all existing operations.

The Cettire share price is now up 249% in the last year. For comparison, the S&P/ASX 200 Index (ASX: XJO) is up a much less significant 3.6%.

The post Cettire (ASX:CTT) share price rips 15% higher as it taps into $150b opportunity appeared first on The Motley Fool Australia.

China's all-powerful Communist Party government has spent 2021 cracking down on several industries that it feels threaten the long-term welfare of the country. Just last month, we saw billions wiped from the valuations of several Chinese companies operating in the education space.

As we reported at the time, this was due to regulatory changes that are forcing these companies to reorganise as not-for-profit entities.

China shares face government crackdowns

We also saw a recent crackdown on the Chinese ride-sharing company DiDi Global Inc (NYSE: DIDI). This may have been the primary catalyst behind the company losing around 42% of its value since its June IPO.

This follows the clamps being put on one of China's largest companies – Alibaba Group Holding Ltd (NYSE: BABA) – last year. Alibaba was planning on spinning off its Ant Financial division at the time. But it was forced to pull the plug at the last minute after intervention from Chinese authorities.

All of these heavy-handed moves by the Chinese Communist Party have seen a plethora of investors lose faith in China shares. Not just the ones directly affected by the actions of the Chinese government either.

The BetaShares Asian Technology Tigers ETF (ASX: ASIA) is an exchange-traded fund (ETF) that holds a basket of mostly Chinese tech shares. These not only include Alibaba and DiDi. It also includes other famous China shares like Tencent Holdings Ltd (HKG: 0700), Baidu Inc (NASDAQ: BIDU) and JD.com Inc (NASDAQ: JD).

The ASIA ETF was one of the best performing ASX ETFs of 2020. But, in 2021 so far, it's down a nasty 12.8%. It's also down close to 30% from its February all-time high.

Future Fund pulls the plug on China

Well, now we have some confirmation that it's not just retail investors with paper hands. According to a report in the Australian Financial Review (AFR) last week, a larger investor has taken note.

That investor is none other than Australia's sovereign wealth fund – the Future Fund. The result? The Future Fund is bailing out of China shares.

Future Fund chair Peter Costello told the AFR that the Future Fund needs to be careful with "sovereign money" in light of "recent circumstances" with China. Here's some of what the former Treasurer said:

China is a big part of the emerging world and ordinarily we would be taking a big position in relation to that… But given the difficulty in the relationship between Australia and China we have pulled back on allocation in China… We think it's wise to be cautious as Australia's sovereign [fund], when we're making the allocations in this difficult political climate.

The AFR reports that the Future Fund had China shares Alibaba and Tencent as its sixth and seventh largest positions as of 30 June. Both positions were reportedly worth more than $1 billion together. But in light of Mr Costello's comments, we can probably assume these positions have been at least pruned.

Mr Costello's comments seem to put the blame for this shift in preference for China shares to the recent well-publicised diplomatic spats between Australia and China. Even so, it's possible that the recent tectonic shifts in China's regulatory environment may have helped to grease the wheels.

Whatever the reason, Australia's sovereign wealth fund is a lot less invested in China shares than it was just a few months ago. Food for thought!

The post Why is the Future Fund bailing out of China shares? appeared first on The Motley Fool Australia.

Now, most China shares are not listed on the ASX, instead finding homes on the US, Hong Kong or Shanghai stock exchanges.

But let's take an ASX China barometer in the BetaShares Asia Technology Tigers ETF (ASX: ASIA). This exchange-traded fund (ETF) is one of the top ETFs on the ASX. It holds within it most of the famous Chinese e-commerce companies in Tencent Holdings Ltd (HKG: 0700) and Alibaba Group Holdings Ltd (NYSE: BABA). As well as JD.com Inc (NASDAQ: JD) and Baidu Inc (NASDAQ: BIDU).

Since topping out at $14.36 a unit back in February, this ETF is now down to $9.76 on current pricing. That's a pretty steep fall of more than 30%.

Looking at some of the individual shares listed above and things look even worse. The Tencent share price is down more than 42% from its 52-week high. JD and Alibaba aren't too far behind, while Baudi is out in front, down more than 53% from its February peaks.

So what's going on here?

China shares face CCP wrath

Well, according to a report in the Australia Financial Review (AFR) today, it's the Chinese government that is largely to blame. The Chinese Communist Party (CCP) has reportedly been executing a crackdown on several industries in China. Most prominantly education and tech companies.

The CCP is forcing certain educational businesses to reorganise as not-for-profit groups. It has also banned them from raising capital on the private markets. Further, the government is also bringing in more regulation, including new rules for delivery drivers.

This follows an incident last year, which saw Alibaba ditch a float of its financial division Ant Group. This also saw Alibaba founder Jack Ma retreat from public life after making comments that some interpreted as critical of the central government.

The report also states that the CCP wasn't too happy with the IPO of Chinese ridesharing company DiDi Global Inc (NYSE: DIDI) last month. This reportedly went ahead, even though "Chinese regulators recommended a delay".

Here's what the report stated happened next:

This insubordination was quickly punished. Days after it went public, China's internet regulator ordered Didi to undergo a cybersecurity review, and banned the road-hailing group from accepting new users.

DiDi shares are now trading for less than half of what they were on the company's first day of trading.

Overall, it seems that the CCP is putting its own control of China's largest companies ahead of what might be good for the short-term (and perhaps medium or long term) share market performance of its largest companies.

This is probably something that every ASX investor with an interest in China shares should pay attention to.

The post What's gone wrong with China shares like Tencent lately? appeared first on The Motley Fool Australia.

ARK is a funds management business over in the United States. Ms Wood is its founder, CEO and chief investment officer. ARK has gained its fame through its suite of exchange-traded funds (ETFs), which specialise in high-growth, future-facing and disruptive companies, usually in the tech space. Ms Wood first rose to fame with her uber-bullish views on some prominent tech shares.

Wood drew a lot of eyeballs a couple of years ago with her unabashedly optimistic views on the electric car and vehicle manufacturer Tesla Inc (NASDAQ: TSLA). Back in May 2019, Cathie Wood surprised even the more bullish investors of Tesla when she spruiked a US$5,905 share price target for the company. At the time, Tesla was a US$40 share (adjusted for last year's stock split). It was also just before Tesla went on its millionaire-minting run. Over the following year or two, Tesla was to shoot up more than 1,100% in value. The fact that Ms Wood was one of the first investors to come out of the gates with such a bullish price target for Tesla earned her and Ark a lot of respect in hindsight.

Growth at scale

But since the days of calling Tesla's success, Cathie Wood and ARK also put some pretty convincing runs on the board. Its flagship fund – the ARK Innovation ETF (NYSE: ARKK) – returned an impressive near-40% in 2019, and almost 150% in 2020. ARK Innovation is a fund that incorporates the 'best ARK picks' from its other, more sector-specific ETFs. Between 1 January 2021 and 12 February, it added another ~25% or so. That's enough performance to catch any investors' eye. Other ARK ETFs performed similarly well, if not better, over these time frames. 

But since February 2021, things haven't been entirely 'coming up Milhouse' for ARK funds. The ARKK ETF has corrected sharply since February when it reached its peak of US$159.70 a unit. On today's pricing, ARKK units are back to US$112.28, giving up more than 28% off of that high.

So is ARK a spent force? Let's take a deeper dive.

What's in an ARK ETF?

Here are the top holdings, and their weightings, in the flagship ARKK ETF, as of 27 May:

As you can see, the fund is heavily weighted to high-growth tech shares. We have Tesla (naturally taking out a large chunk at the top there. But we also have companies like Roku, Square, Shopify, Spotify, Zoom and Coinbase.

These companies are all very similar in nature. They are disruptive, tech-based companies that have long growth runways, and a lot of future potential. But they are also not too profitable today, and still very much in 'growth phase'. These companies are at the stage of their lives where they are prioritising revenue growth over profitability. That's why most of them don't even have price-to-earnings (P/E) ratios yet. Or if they do, they are normally in the triple-digits. Take Tesla. Its P/E ratio is currently sitting at 635.7.

What about some other ETFs?

We see similar patterns in some of ARK's other popular ETFs.

Here are the top ten holdings for the ARK Fintech Innovation ETF (NYSE: ARKF) fund:

And here is what the ARK Next Generation Internet ETF (NYSE: ARKW) fund holds:

Again, very similar businesses – high growth, disruptive, priced for future profitability rather than the money they make today.

So why have ARK funds had a bad few months?

And now we can look at the main problem that these funds face. They tend to do well, really well, when the market is running hot, and growth companies are 'in vogue'. By definition, growth companies tend to outperform the broader markets during a bull run and underperform during a bear market. 2019, and post-COVID 2020 were decidedly the former.

But why the underperformance since February 2020? After all, the US S&P 500 Index (INDEXSP: .INX) has gone and pushed to more record highs since 12 February. Most recently on 7 May.

Well, another factor at play has been fears of inflation and rising bond yields, which have spiked in the months since 12 February. According to CNBC, the US 10-year Treasury yield was well under 1% at the start of 2021 and was around 1.18% on 12 February. This yield reached a high of roughly 1.75% in late March and still stands at 1.61% today.

Rising bond yields typically turn sentiment against companies who are being priced on future earnings, rather than what they offer today. In other words, most of the stocks that ARK funds hold. We saw similar gyrations in our own ASX tech sector between February and May.

What does the future hold for ARK?

The big corrections in the value of Ark funds over the past few months might have dented some of the optimism that many of its investors would have been feeling in the months and years prior. But if the market was once again to fall back in love with the kinds of future-facing tech companies that ARK invest in, it is conceivable that we will see ARK funds back at all-time highs. Time will only tell. But Cathie Wood and ARK are probably not going away anytime soon regardless – as barometers of high-octane growth stock investing if nothing else.

The post An ASX guide to Cathie Wood and ARK Invest ETFs appeared first on The Motley Fool Australia.

Thus, if you are really bullish on tech, it might be prudent to look beyond our shores to bolster your portfolio.

That's where this ASX exchange-traded fund (ETF) comes in.

The BetaShares Asia Technology Tigers ETF (ASX: ASIA) is an ETF dedicated to tracking the best tech companies in Asia, outside of Japan. Asia is the most populous continent on the planet. Despite this, it's also an area where the big US tech companies have a far more limited reach and scope than in advanced economies like the US and Australia. Alphabet Inc's (NASDAQ: GOOG)(NASDAQ: GOOGL) Google is essentially banned in China, after all. As is Netflix Inc (NASDAQ: NFLX) and Facebook Inc's (NASDAQ: FB) products.

Asian tech tigers roar

That's where the usefulness of an Asian tech company like Baidu might come in handy. It's often described as the 'Google of China'. Or iQiYi, the 'Netflix of China'. Not to mention the pervasive dominance of Chinese ecommerce companies like Tencent Holdings, JD.com or Alibaba Group Holding Ltd. These companies dominate both the Chinese e-commerce market, as well as China's social media scene.

All of these tech companies are major holdings of the BetaShares Asia Technology Tigers ETF. Other holding include the global electronics titan Samsung Electronics Co. As well as the giant computer chip manufacturer Taiwan Semiconductor Manufacturing Co Ltd.

But China is the country that dominates this ETF with 54% of the fund's holdings. Taiwan comes in second with 22%, with South Korea, India, and Hong Kong rounding out the list with 18.3%, 4.8%, and 0.2% respectively.

But turning to performance, and we can really see the value of investing in the Asian tech sector. The index that the ASIA ETF tracks has returned an average of 26.3% over the past 3 years and 29% per annum over the 5 years. The ASIA ETF itself has returned 36.5% per annum since its inception in 2018. As well as a whopping 70.34% over the past 12 months alone. It charges a management fee of 0.67% per year.

The post Love tech shares? This ASX ETF is a great buy today appeared first on The Motley Fool Australia.

China is the world's second-largest and most populous economy. As such, China has been climbing its way up investors' watch-lists in recent years. In no doubt helped by the stellar performance of some of its biggest companies.

US-based tech companies like Tesla Inc (NASDAQ: TSLA), Alphabet Inc (NASDAQ: GOOGL)(NASDAQ: GOOGL), Amazon.com, Inc (NASDAQ: AMZN) and Netflix Inc (NASDAQ: NFLX) are arguably still more popular with Aussie investors. Even so, it's fairly safe to say that Chinese companies have worked their way into the ASX investor conscience.

Aussie investors are probably familiar with one of China's biggest companies after 2020 – Tencent Holdings (OTCMKTS: TCEHY). Tencent made waves last year when it acquired a 5% stake in buy now, pay later (BNPL) darling Afterpay Ltd (ASX: APT) in May – an investment that would have already paid off very handsomely.

Chinese shares prove popular

Other Chinese companies, particularly those in the tech space, are also proving very popular. Just this week, we looked at some of the most popular international shares that ASX investors have been buying of late. And over the week of 4-8 January, 2 Chinese companies were in the top 10 list.

They were the e-commerce juggernaut Alibaba Group Holdings Ltd (NYSE: BABA) and the electric vehicle and battery manufacturer Nio Inc (NYSE: NIO), the 'Tesla of China'.

Other popular Chinese companies include JD.com Inc (NASDAQ: JD), often described as the 'Amazon of China', Baidu Inc (NASDAQ: BIDU), the 'Google of China' and iQiYi Inc (NASDAQ: IQ) the 'Netflix of China'.

The stellar performances of some of these companies have no doubt helped. Tencent, for example, is up more than 52% over the past 12 months. Baidu is up more than 70%, and Nio a whopping 1,550%.

As you might have noticed, these companies, although Chinese, are all listed on American stock exchanges like the Nasdaq and the NYSE. Tencent is listed on the over-the-counter (OTC) markets.

But these companies have recently become potential casualties of the rising geopolitical tensions between the United States and China. Just last month, US President Donald Trump signed a law that requires "foreign companies to submit to increased accounting disclosures and to certify that they are not owned or controlled by a foreign government".

According to reporting in the Australian Financial Review (AFR) 2 weeks ago, the NYSE has already begun the delisting process for 3 Chinese companies – China Telecom Corporation, China Mobile and China Unicom. Other popular Chinese companies like JD.com have initiated separate listings on the Hong Kong Stock Exchange in anticipation of a potential delisting move.

China's 'big 3' safe… for now

However, holders of the more popular Chinese companies will be breathing a sigh of relief today.

According to a separate AFR report today, the US government will not be forcing Alibaba, Tencent and Baidu to delist from American exchanges.

According to the report, the US Treasury has "blocked an attempt" by the Pentagon and the US State Department to delist these companies. That's despite the latter 2 agencies "pushing hard" for delisting due to "alleged links to the Chinese military".

Whilst this move might be irrelevant for many ASX investors who don't hold the US-listed Chinese shares themselves, it would have had other consequences.

A popular and best performing exchange-traded funds (ETFs) on the ASX is the BetaShares Asian Technology Tigers ETF (ASX: ASIA). This ETF has more than $558 million in assets under management, and has returned 62% over the past 12 months. It holds Alibaba, Baidu and Tencent, as well as JD.com and iQiYi. ASIA unitholders (and BetaShares) would be very pleased with this development.

In 2021, Chinese companies will instead be dealing with a Biden Administration in the US. As such, it's unclear whether the pressure on US-listed Chinese companies will deflate or ramp up in 2021 and beyond. But recent history is no doubt causing some worry for Chinese-focused ASX investors.

The post US decides against delisting Tencent and other Chinese giants appeared first on The Motley Fool Australia.

On Wednesday, the House of Representatives unanimously passed a bill that could result in the delisting of Chinese companies from U.S. stock exchanges. The Holding Foreign Companies Accountable Act (HFCAA) has been sent to President Trump, who is expected to sign the measure later today, which also received unanimous support from the Senate earlier this year. 

The sweeping legislation would require foreign companies to submit to increased accounting disclosures and to certify that they are not owned or controlled by a foreign government. It also includes provisions that the statements be backed up by an audit conducted in accordance with U.S. accounting rules by the Public Company Accounting Oversight Board (PCAOB).

The legislation could result in the delisting of a number of popular Chinese companies from major U.S. exchanges, including e-commerce players Alibaba (NYSE: BABA) and JD.com (NASDAQ: JD), as well as internet search giant Baidu (NASDAQ: BIDU) and electric vehicle (EV) maker NIO (NYSE: NIO).

Just last month, the Securities and Exchange Commission announced it was preparing to adopt tougher rules that could take effect as early as 2022. These requirements lay the groundwork for the delisting of foreign equities when their companies fail to comply with U.S. auditing rules. 

Regulators have long been vexed by the Chinese government's refusal to allow the PCAOB to review audits of Chinese companies listed on U.S. exchanges. Some believe this contributed to the spectacular fall from grace of Luckin Coffee (OTC: LKNC.Y), which flamed out earlier this year following the discovery of massive and widespread fraud. The company was found to have manufactured a significant portion of its 2019 revenue and was subsequently booted from the Nasdaq exchange.  

Numerous companies in China have admitted to contingency plans if the bill is passed. NetEase (NASDAQ: NTES) and JD.com each acknowledged the proposed rules when they announced subsequent listings on the Hong Kong Stock Exchange.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post President Trump to sign bill that could kick Chinese stocks off U.S. exchanges appeared first on The Motley Fool Australia.