JPMorgan upgrades China’s tech sector, says it’s time to buy these stocks

This photo from September 25, 2020 shows Jack Ma, founder of Alibaba Group, attending the opening ceremony of the 3rd All-China Young Entrepreneurs Summit in Fuzhou, Fujian Province of China. Alibaba is among the Chinese technology stocks recently upgraded by JPMorgan analysts.

Just two months after calling the Chinese tech sector "uninvestable", JP Morgan has upgraded Chinese tech stocks.

The ratings for the Chinese internet firms have been raised by analysts at the U.S. investment.

Significant uncertainties should begin tobate on the back of recent regulatory announcements that came earlier than expected, according to a note published Monday by the bank.

The bank said that digital entertainment, local service and e-commerce will be the first batches of outperformers.

Key risks to the sector have diminished, particularly in terms of regulatory risk, the analysts said.

In March, a call was made by a team that said the sector was uninvestable for the next six to 12 months. CNBC asked for comment on the claims made in the report, but did not hear anything.

Chinese internet stocks were already taking a beating before the bank's March call, hammered by months of regulatory uncertainty and worries over supply chain disruptions from the mainland.

The Hang Seng Tech index, which tracks the largest Hong Kong-listed technology stocks, has fallen more than 27% this year.

Concerns over a higher interest rate environment as major central banks look to tame hot inflation have also been an overhang for the broader tech sector globally. Future earnings for growth companies look less attractive when rates rise.

The tech-laden index on Wall Street has fallen more than 25%.