JPMorgan Chase's Alex Yao: Chinese technology stocks can still rise by 20%-25%

Former Morgan Stanley analyst who was bearish on Chinese tech stocks is now bullish.

Alex Yao, Co-Head of TMT Research at Morgan Stanley Asia, recently stated in an interview: "Considering the improvement in cost structure and easing competition, we believe there is still about 20% to 25% upside potential for Chinese tech stocks."

Yao pointed out that overall, if the macroeconomic recovery continues, Chinese e-commerce companies will benefit from the cyclical recovery in consumption. Investors have been closely monitoring Chinese economic data, including consumption growth, inflation, and the development of the real estate market, to look for clues about the strength of the Chinese economic recovery.

He said: "Preliminary signs of stabilization in macroeconomic indicators are the main driving force behind the rebound of Chinese tech stocks, and a key factor affecting future stock price trends. Moreover, improvements in Chinese consumption and strong exports have also brought some encouragement to investors."

Two years ago, Yao's bearish report sparked intense discussions.

However, in April this year, Yao released a report stating that the Chinese tech industry has already bottomed out. Yao's change in view of the Chinese tech industry also signifies that some investors who once doubted Chinese tech stocks are beginning to change their views on the Chinese stock market.

On Wednesday, with the convening of the Lujiazui Forum, leading stocks such as Tencent and Lenovo led a strong market rebound.

Now, Yao emphasizes that if Chinese tech companies can maintain long-term profit growth of 10% or even 20%, people should reward those companies with sustainable profits