Internet companies Illustration: VCG

US-listed Chinese internet shares rebounded last week, as US retail and institutional investors bet on their long-term growth after temporary fluctuations due to concerns over recent tightening supervision.

NASDAQ-listed Chinese e-commerce platform JD.com popped by 20.14 percent during the week ended on Friday. NetEase rebounded by 15.04 percent, while video-sharing platform Bilibili was up 13.21 percent and Baidu rose 11.34 percent.

Their rebound came as US retail investors added US-listed Chinese internet stocks to their portfolios in a wave of bargain-hunting. 

A report released by global independent research firm Vanda Research on Wednesday showed that in the previous five trading days, net purchases of Chinese stocks by US retail investors exceeded $400 million, with Chinese e-commerce behemoth Alibaba being the most bought in the US on Monday, media reports said.

Meanwhile, discussions about investing in US-listed Chinese stocks surged recently on Reddit, with some saying that Alibaba is severely underpriced now considering its long-term growth potential.

Alibaba rebounded by 0.96 percent last week. 

Some foreign institutional investors have also been accumulating Alibaba shares. Goldman Sachs Group added 5.87 million Alibaba shares as of June 30, up 23.86 percent quarter-on-quarter, according to the company's second-quarter report.

"The renewed enthusiasm among US investors for Chinese stocks reflects that their concerns are being dispelled as they gradually understand the essence of the Chinese central government's recent regulatory actions," Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times.

He said that the government's administrative measures only act as "patches" to rectify "unhealthy" development in the domestic internet sector, while the country's need for internet services will persist, given the huge market size.

The passage of a series of laws in China to crack down on illegal activities in the internet sector also provides much more certainty to the market. The country passed the Personal Information Protection Law on August 20, which, along with the Cyber Security Law and Data Security Law, will create a comprehensive legal framework to regulate businesses' collection, storage and use of key data concerning national security.

However, ignoring US investors' confidence in Chinese tech companies, the US government is continuing a crackdown on the firms in its push for financial decoupling. Recently, US Securities and Exchange Commission Chairman Gary Gensler pledged to strictly enforce a three-year deadline requiring Chinese companies to allow US inspections of their financial audits, Bloomberg reported.

Against this backdrop, more US-listed Chinese companies may choose to retreat from the US and seek secondary listings in Hong Kong, Dong said, noting that they will abandon the US equity market if it can't meet their demand for capital, branding and operations.

A new PwC report shared with the Global Times showed that Hong Kong has become a popular market for secondary offerings by US-listed, Chinese mainland-based internet firms, with the appeal of the market expected to keep growing in the coming months and years.

Global Times