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FirstFT: China tech stocks improve while economic activity plummets

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Research analysts at JPMorgan Chase have endorsed a clutch of Chinese internet stocks deemed “uninvestable” just two months ago in a significant shift of sentiment towards the sector.

In a series of rating changes on Monday, technology analyst Alex Yao and his team upgraded seven companies to “overweight” having assigned them “underweight” ratings in March. JPMorgan also upgraded several other Chinese stocks from “underweight” to “neutral”.

An “overweight” classification typically means an analyst is recommending that their clients hold more of the stock than the relevant benchmark index as opposed to less. The labels are similar to a change from “sell” to “buy”.

Ratings on NetEase, Tencent, Alibaba, Meituan, iQIYI, Dingdong and Pinduoduo were all upgraded on Monday, as the companies begin to recover from a sharp sell-off earlier this year. NetEase slumped more than 30 per cent for the year to March 15, but has since recovered and trimmed its year-to-date loss to about 10 per cent.

While technology companies’ stocks improve, China’s economic activity has plummeted amid Covid lockdowns. Retail sales slumped 11.1 per cent year on year, compared with forecasts of a 6.6 per cent fall by economists polled by Bloomberg. Industrial production dropped 2.9 per cent.

Wall Street stocks fell in choppy trading on Monday as weak economic data from China put further pressure on the global economic outlook.

Do you have feedback on today’s newsletter? Email me at firstft@ft.com. Thanks for reading FirstFT Asia — Emily

1. Putin signals acceptance of Finland and Sweden joining Nato Vladimir Putin has signalled Russia will tolerate Finland and Sweden joining Nato, but warned that the Kremlin would respond if the alliance installed military bases or equipment in either country. Turkey president Recep Tayyip Erdoğan, however, has objected to the two nations’ applications, accusing the countries of supporting Kurdish militants.

2. Buffalo shooting suspect planned further attacks, police say The teenager suspected of the racially motivated mass shooting in Buffalo, New York, this weekend planned to continue his “rampage” had he not been stopped, the city’s police commissioner said on Monday. “He had plans to continue driving down Jefferson Avenue to shoot more black people,” Joseph Gramaglia, police commissioner in Buffalo, told ABC News.

3. India’s wheat export ban shakes markets Wheat prices rose by the maximum amount allowed on Monday after India imposed a ban on exports, stoking pressure on food costs as tight global supplies roiled international markets. Futures traded in Chicago rose as much as 5.9 per cent to $12.47 a bushel, their highest level in two months.

Line chart of Chicago wheat ($/bushel) showing Wheat prices jump after India export ban

4. Nomura prepares to launch crypto subsidiary Japan’s largest investment bank is to launch a new company to help institutional clients diversify into cryptocurrency, decentralised finance and non-fungible tokens, despite a recent run of volatility in the crypto market that has raised fundamental questions over its safety for investors.

5. Harrow Beijing school loses its hallowed British branding A Beijing school affiliated with the 450-year-old English public school Harrow has been forced to drop its famous brand name as part of a broad tightening of controls on education providers in China. Harrow Beijing has told parents that the bilingual school will in the future be known by the name Lide.

The day ahead

JD.com earnings The Chinese ecommerce group will report first-quarter earnings. Last month its founder Richard Liu stepped down, marking the latest exit for one of the country’s top entrepreneurs.

Sweden hosts Finland president Finnish president Sauli Niinistö makes a state visit to Stockholm as the two countries prepare to join Nato

ECB supervisory board chair speech Andrea Enria, chair of the European Central Bank’s supervisory board, gives a keynote speech at the Institut Montaigne in Paris.

Correction: In Friday’s quiz one of the questions did not match the answer. We apologise for an error.

What else we’re reading

Cardinal Zen will not fear the fate that awaits him in Hong Kong When the FT’s Tom Mitchell hosted a talk by Roman Catholic cleric Cardinal Joseph Zen at Hong Kong’s Foreign Correspondents’ Club in June 2009, it never occurred to him that doing so would one day become a legally perilous act.

Food insecurity crisis is a bigger problem than energy Governments are spending a lot of time and resources trying to mitigate the soaring cost of energy following Russia’s invasion of Ukraine, writes Meghan Greene. But the war has sown the seeds of an even bigger crisis that is not getting nearly the same amount of attention: the global food shortage.

A food market in Colombo, Sri Lanka. Food insecurity is a source of social unrest and geopolitical risk, with rising prices sparking protests in Sri Lanka © Ishara S Kodikara/AFP/Getty Images

The new ESG realpolitik and the fossil fuel bonanza The world is not ready for an immediate shift to green energy, writes Patrick Jenkins. Pushing businesses out of fossil fuels and into renewables is the next step — but a less obviously appealing one. Being frank about that is as important for the reputation of ESG as it is for the future of the planet. Sign up here for our ESG and sustainable finance newsletter, Moral Money.

Is Elon Musk too big to regulate? Many on Wall Street saw Elon Musk’s tweet on Friday announcing he was putting his purchase of Twitter “temporarily on hold” as a way of softening up Twitter’s management to negotiate a lower offer. But legal experts said it was another example of the Tesla chief executive flouting securities regulation, leaving him open to the SEC’s nuclear option.

Crimea could be Putin’s tipping point in a game of nuclear chicken The US thinks Vladimir Putin would authorise the use of nuclear weapons only if he perceived an existential threat to Russia. But what would qualify as such a threat, asks Malcolm Chalmers of the Royal United Services Institute.

Travel

One of the world’s oldest, most persistent, most chequered, most romantic of roads, the King’s Highway in Jordan, is as legendary and evocative as the Silk Road. Follow along with a trip along the country’s spine, in the footsteps of John the Baptist and TE Lawrence.

© Alamy

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