Some note April 29 as the turnaround point, the day the Politburo called for regulators to act in alignment and support the platform economy — a term referring to internet companies that offer multiple services. But indices heavily weighted toward Chinese tech names, like the MSCI China index, have largely moved sideways since then. The CSI 300 index, which only tracks China-listed stocks and leans more toward financials, industrials and consumer staples, has climbed, albeit only a little. 

Excitement built earlier this month after the Wall Street Journal reported that Chinese regulators were preparing to wrap up their investigation into ride-hailing company Didi Global Inc. and make its main apps available for download again. The stock surged as much as 68% in a single day. Didi, which like Uber Technologies Inc. and Lyft Inc. relies on its Android and iOS software to connect with customers and drivers, had a halt placed on 26 of its apps when Beijing decided last year that the company’s data-sharing warranted a closer look. 

As predicted, that national security review resulted in Didi seeking a delisting from New York not long after its debut. Any investor surprised by recent news that the curbs on its app were about to be lifted just wasn’t paying attention. The company literally said as much when it implored shareholders last month to pass a motion to delist.

“The Company has concluded that it needs to complete the cybersecurity review and rectification in order to resume normal operations …  and that if it does not delist from the NYSE, it will not be able to complete the cybersecurity review and rectification.”

On May 23 investors heeded that call and the shares will no longer trade on the New York Stock Exchange. Beijing ending its app store ban was the next logical step. Ironically, the shares barely budged when the actual vote was announced, the true catalyst for officials to ease up. Clearly optimists — who rallied around the news of an easing — and pessimists — who ignored the earlier shareholder vote — both took something away from this development.

Then there’s Ant Group Co., the financial affiliate of Alibaba Group Holding Ltd. which had its IPO nixed at the last minute following Jack Ma’s now-infamous October 2020 speech criticizing regulators.

A revival of Ant’s public listing would be the closest we’re likely to get to forgiveness for Ma and Alibaba, and would rightfully be viewed as a signal from Beijing that the crackdown is over. Bloomberg News reported last week that the China Securities Regulatory Commission was weighing allowing a list to be revived, though both the CSRC and Ant later said they have no such plans. Even the carefully worded responses, a kind of non-denial denial, could be taken by bulls and bears as the sign they seek. Alibaba shares surged as much as 4.4% after the Bloomberg News story, but slumped again after the statements from the CSRC and Ant.

Alibaba offered its own signal to the market last month when it declined to offer its usual outlook for the year, a move that speaks to the lack of clarity emanating from Covid lockdowns, supply chain snarls and global economic troubles. But haziness about the regulatory environment is surely among the factors management can’t accurately model. For example, executives said the company will probably benefit from stimulus measures announced by the government, while it also reiterated its commitment to helping small and medium enterprises, which could impact profit margins.

Others are suffering, too. Online content provider Bilibili Inc. jumped after Chinese news outlet Caixin reported it’s cutting jobs in gaming and live-streaming divisions, but plummeted a few days later after missing earnings. DouYu International Holdings Ltd., another live-streaming provider, is down almost 30% since that Politburo meeting, having noted that stricter regulation will continue to hit revenue.

The plethora of positive signs seem enough to spur people into speculating that the bottom has been reached, and perhaps Beijing will even boost investor confidence ahead of this year’s 20th Communist Party congress. That’s wishful thinking.

As a clear-minded fund manager once told me, “You don’t move to Hawaii for the weather, you move there for the climate.” The point being that cloud or sunshine on any single day are short-term distractions from the long-term thesis. China remains one of the world’s largest consumer economies, even with its regulatory and economic challenges, yet the heady growth days are undoubtedly over.

The argument being made that now is the time to jump back into Chinese tech is boosted largely by quantitative analysis. The sector trades at a 10% discount to the broader market — compared with a historical premium of 35%, according to a recent strategy note from Bernstein’s Rupal Agarwal, Robin Zhu and Shivam Gupta. They calculate that drawdowns have already hit 37%, surpassing the 35% seen in the 2018 down cycle.  “While risks remain, we think there are reasons to believe an inflection point has been hit,” they wrote on June 10.

But there’s a flipside. “From a fundamental perspective, I see no reason to become bullish just yet,” DZ Bank AG analyst Manuel Muehl said in a June 7 email, Bloomberg News reported. He was the first of more than 70 analysts to issue sell ratings on Alibaba and fellow e-commerce company JD.com Inc. a year ago and maintains that bearish view, citing slowing revenue growth and weakened margins among Chinese tech companies. 

There are myriad weather patterns out there for market bulls. And they may indeed find some patches of clear sky amid the thunder and lightning. But what investors need ask themselves is whether the climate itself has changed. The answer may not be so sunny after all.

More From This Writer and Others at Bloomberg Opinion:

• You Don’t Need a CFA to Value Chinese Equities: Matthew Brooker

• China’s Tech Companies Get a Reprieve, Not a Pardon: Tim Culpan

• There’s No Hiding From the Bad News This Time: John Authers

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tim Culpan is a Bloomberg Opinion columnist covering technology in Asia. Previously, he was a technology reporter for Bloomberg News.

More stories like this are available on bloomberg.com/opinion