Renminbi-based assets alternative to Wall St

While US-listed Chinese companies have seen their share prices tumble on Washington's tightening expectations, investors can still find opportunities in yuan-denominated assets to hedge risks amid mounting uncertainties in the global market, experts said.

As the US Securities and Exchange Commission identified on Thursday five US-listed Chinese companies failing to follow the Holding Foreign Companies Accountable Act, prices of all the Chinese companies trading on US exchanges plunged an average 20 percent by Friday and the benchmark MSCI China Index fell by 4 percent.

The hemorrhaging has not stopped. Industry giants like Alibaba and Nio shed more than 10 percent on Monday, while the Nasdaq dropped 2.04 percent. E-commerce platform Pinduoduo, online grocery and food delivery firm Dada and knowledge-sharing website Zhihu all lost more than 20 percent.

Public data showed that 93.21 percent of US-listed Chinese companies saw their prices contract over the past 12 months. Over 70 percent of these companies have seen their prices drop below $5 per share. Education, internet software and services companies reported the most drastic slides.

Bloomberg reported on Tuesday that the US Public Company Accounting Oversight Board (PCAOB) has held talks with Chinese regulators many times recently. The two sides are committed to reaching a cooperation agreement so that the PCAOB can inspect Chinese mainland companies registered in the US and some Hong Kong audit firms engaging in Chinese mainland businesses.

Wang Zonghao, head of equity strategy research at UBS China, said that the US market may have overreacted. The SEC's tightening grip over listed Chinese companies was overhyped in December and prices of these companies have fallen significantly of late.

Investors' weaker risk appetite, China's less-than-stellar macroeconomic data over the past two months and recently lowered profitability forecasts for public companies may have resulted in the latest sell-off, Wang said.

Most US-listed Chinese companies are now dual-listed.

On the other hand, most of the US-listed Chinese mainland companies are qualified for dual listings in Hong Kong, where the securities regulator may further loosen its profitability requirements for innovative tech companies. Once approved, about 41 small to medium-sized enterprises currently trading in the US may be qualified for listings in the city, he said.

Wang also pointed out that the price earning ratios of US-listed Chinese companies hit an eight-year low. In anticipation of more government stimulative policies, profitability of both onshore and offshore Chinese companies is expected to improve.

Goldman Sachs analysts also agreed that the Chinese equities have been oversold. The investment bank forecasts 16 percent gains for the MSCI China Index this year. The market estimate for the MSCI China Index should come in at 12.5 times, while the reading is only 9.9 times at present, the lowest in six years.

Experts from Hong Kong-based CSOP Asset Management recommended investing in renminbi assets thanks to their relatively lower correlation to other markets, especially when concerns over geopolitical tensions have become a major consideration.

Similarly, Credit Suisse upgraded China to "overweight" in its global stock strategy report for 2022, reversing a downgrade of the stocks 12 months ago. China's expected monetary policy easing, while elsewhere it is being tightened, has given the institution confidence in Chinese equities.