On Monday, Reuters- J.P. Morgan analysts upgraded the stocks of some Chinese internet companies and the brokerage expects significant uncertainties to be faced by the sector.
China loosened its crackdown on the once-freewheeling tech sector last month as President Xi Jinping sought to bolster the economy in the face of growth-sapping COVID 19 lockdowns.
The brokerage increased the rating and price targets for stocks such as Alibaba Group, Baidu, Pinduoduo Inc and Bilibili.
The first batch of outperformers is expected to be digital entertainment, local service, and e-commerce, according to Alex Yao, analyst at J.P. Morgan.
In March, the brokerage downgraded 28 Chinese internet stocks to neutral or underweight based on rising uncertainty from a regulatory crackdown and delisting risks.
China's second-largest economy is following a zero-COVID policy because of the outbreak of supply chain bottlenecks and strict lockdowns in some cities.