The Chinese technology sector has faced difficulties. The Hang Seng Index, reflecting the state of the Chinese technology sector, has decreased by 6.2% in 2023, and the stocks of JD.com Inc. and Meituan have lost over a quarter of their market capitalization. Investors believe that the period of endless technological growth in China has come to an end due to limitations imposed by government policies on the development of the private sector.
However, the decline in Chinese stocks attracts some investors. Stocks of companies included in the Hang Seng Tech Index are trading at a ratio of 21.4 to projected earnings, which is below the three-year average of 29.2. Investors are hopeful for a market recovery due to new government stimuli and positive sales data.
At the same time, valuations of Indian technology companies raise concerns. Some experts believe that they are overvalued since their debut in the market. For instance, analysts at Macquarie Group downgraded the rating of Paytm stocks to neutral, citing regulatory and competitive risks.
Nevertheless, analysts consider Indian stocks still attractive due to record levels in the stock market, rapid economic growth, and the interest from major international companies, including Tesla Inc. Sol An, Senior Investment Analyst at Mirae Asset Global Invest HK Ltd., notes that attractive prospects exist for internet companies in both China and India, but Indian companies have significantly greater growth potential. She forecasts that in the coming years, the market will offer even more interesting investment opportunities with the emergence of new companies.
