Chinese markets have been beaten up over the last 15 months, as the country’s “zero-Covid” strategy and lockdowns of major cities stifled economic activity, while regulatory crackdowns placed further downward pressure on businesses, particularly domestic internet titans such as Tencent and Alibaba.

Hong Kong’s tech-heavy Hang Seng index is down around 25% over the past year, while the Shanghai Composite has dropped close to 9%. On Monday, China markets continued to fall, caught up in fears surrounding rate hikes by the U.S. Federal Reserve after Friday’s hotter-than-expected U.S. inflation numbers. The Hang Seng slid over 3.5%, while the Shanghai Composite slipped 1.45%.

However, as China begins to reopen and Beijing signals some intent to ease its scrutiny on the tech sector amid the economic downturn, strategists are turning cautiously optimistic.

JPMorgan Asset Management’s Global Market Strategist Tilmann Galler said that efforts to reopen cities and launch vaccination campaigns indicated that Beijing had realized its “zero-Covid” strategy was unsustainable. Instead, the country looks to be transitioning to a “living with Covid” policy, he added.

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