Analysts’ top Asia stock picks in 2021

Alternatively, if you aim to discover a select set of monthly recommendations carefully chosen from a roster of prominent quantitative stocks, you might want to delve into Alpha Picks. PDD Holdings is a standout amongst global bullish wedge pattern and Chinese broadline retailers. It is a fast-growing massive e-commerce company with a market capitalization of +$137B. Alibaba released second-quarter financial results that managed to beat Wall Street forecasts.

Chinese stocks, especially in technology and tech-esque industries, have been hammered over the past year as stringent COVID lockdowns hampered manufacturing and, overall, dampened the economic outlook. Leading Chinese stocks listed in the U.S., such as Alibaba (BABA), JD.com (JD) and NetEase (NTES) have come to the fore. Several Chinese companies are also among the most profitable in the world, as we discovered during our research of the 11 Most Profitable Chinese Stocks, as they pull in tens of billions of dollars in net income annually.

Should I invest in Chinese stocks?

The country is a major technology and digital entertainment hub, even if the vast majority of its products and services are destined for domestic use. Among the backdrop described above, China is still expected to achieve a mid-to-high single-digit GDP growth in 2021. However, over the last 15 years, non-strategic SOEs such as local consumer or technology businesses are behaving more like profit-seeking entities. Much of the investment activities that previously took place in private and venture capital markets are increasingly accessible to investors in listed equity markets.

A slight drop in price indicates that now might be a great time for investors to buy. The majority of the company’s growth has taken place since the beginning of 2020. For all intents and purposes, China Unicom is a penny stock, currently trading for $4.42. As the world continues the race toward wide-scale 5g integration, China Mobile will be one company that benefits wide-scale from the introduction of the technology. Alibaba hit record trading prices around October of 2020 and has since hit a bit of a lull in performance.

Vipshop Holdings Limited (NYSE:VIPS)

Despite fears of slower business growth amid the regulatory crackdowns and a weakening in the macroeconomy, four of the five selected companies have seen significant increases in their free cash flows over the past year. The strong free cash flow generation should help with their commitments to the ‘common prosperity’ drive Beijing has been pushing over the past months. NTES stock managed to post an 8.2 percent gain from end-2020, albeit thanks to a big bounce on the penultimate trading day of 2021. 2021 has been a painful year for shareholders of Chinese stocks in general. Alibaba Group Holding Ltd (BABA) had appeared to be the sole target of Beijing after the authorities scuttled the initial public offering [IPO] of its fintech arm, Ant Group. The trigger was often attributed to a scathing speech by its founder Jack Ma decrying that outdated regulations had been hobbling the fintech industry.

Get this delivered to your inbox, and more info about our products and services. IPO in late June, Chinese ride-hailing app Didi had to suspend new user registrations for a government review. Earlier this month, the company said it would delist from the New York Stock Exchange and list in Hong Kong. But most of the affected stocks have low levels of U.S. ownership, according to a Morgan Stanley report published Dec. 9. And even those with more American money don’t include well-known names like Alibaba. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services.

The Taobao Tmall Commerce Group will remain wholly owned by BABA. On the face of it, shares of Chinese internet giants traded in American markets through A.D.R.s might seem to be safer for Americans than shares sold in local markets like Shanghai, Shenzhen or even Hong Kong. Chinese regulators have their own unsettling concerns about big tech companies.

Tencent

And then they level a fee for the call and potentially an added fee for trading on a foreign exchange. Since it was added to the Profitable Investing portfolio, it has returned 84.90%, including its dividend yielding 2.20% which is pretty high for a high-tech stock. Second is BlackRock, one of the biggest asset managers in the world. The company is the go-to for exchange-traded funds (ETFs) as well as active funds. And of course, it runs trillions of government money, and not just in the U.S. as it runs Chinese sovereign investment funds and does very well with the leadership in Beijing. AUM keeps climbing — especially over the past two quarters — but that’s just the ongoing trend.

While it’s currently producing close to 100 GWh annually, the company expects to increase it to more than 800 GWh by 2030. Indeed, while BABA stock could be volatile in the short term amid the noise over delisting as well as slowing growth in China, it looks among the best stocks to buy for the long term. The stock’s valuation is at a big discount to global e-commerce companies and the risk-reward looks attractive at these price levels.

Given that BABA managed to hold on to its ‘neutral’ rating despite three ‘D’ factor grades, perhaps it has much to thank for the ‘A+’ factor grade it received for profitability. It may be even more baffling that Wall Street analysts remain ‘very bullish’ on the embattled BABA stock. In this respect, the quant rating of ‘neutral’ seems to be raining on the bulls’ parade.

Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. Like Alibaba, Tencent is already dominant and has a strong market position. In July, the company was fined $77,150 (a pittance for Tencent) for not properly reporting the purchases of two apps, Kuwo and Kugou, and the company was told it would have to give up exclusive rights to some music labels. Then in August, Chinese regulators announced they would ask companies to implement policies that would restrict the amount of time young people can spend playing video games. There’s also concern that accounting practices at Chinese companies lack the level of scrutiny found in other countries, creating an increased potential for fraud — the downfall of Luckin Coffee being a notable example.

The 3 Best Chinese Stocks to Buy Now: September 2023

Instead, it focuses on what matters to nations and leading economies of the Asia-Pacific region. It includes China, Japan, South Korea and Australia and New Zealand as the biggies of the region. And it also includes major transitioning economies, including Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand. The biggest trade deal in the world was signed in November after more than nine years of planning and negotiations. It is called the Regional Comprehensive Economic Partnership, or RCEP, which to me calls to mind the word reciprocal.

• The company generated net revenue of $3.7 billion, up by 4% year-over-year, but missed analysts’ expectations of $3.68 billion.
• An alternative method of gaining exposure to Chinese companies is through ETF trading​, where you also do not take direct ownership of the asset but instead trade on its price movements.
• Another detractor would be the relatively inexperienced Chinese retail investor and their trading culture where frequent sector rotation and sudden swings in market sentiment affects share prices.

Bookmark this page to stay on top of the latest movers and shakers in China. We’ll feature ongoing coverage of other industry leaders and disrupters like Vipshop (VIPS), Baozun https://1investing.in/ (BZUN), Tencent (TCEHY), New Oriental Education (EDU), GSX Techedu (GSX) and Pinduoduo (PDD). PDD stock has the TEMU shopping app that is catching Wall Street’s attention.

U.S. retail investors only account for about 13% of U.S. trading volume in Chinese stocks listed there, the Morgan Stanley analysts estimated. Companies with growth such as Alibaba’s often trade for high multiples, but after the past few months, it has a price-to-earnings ratio of 21.1, more in line with an old-line value company. But which are the best Chinese stocks to buy or watch right now?

Get more than your Tencent’s worth

But the brand may target pickup trucks, according to local media, with fully electric and hybrid options. BYD will build an auto plant in Thailand, with production set to begin in 2024. It’s also going to build factories in Brazil, including one for personal vehicles. The Energy-Solar group is ranked No. 6 out of 197 currently, but there are definitely leaders and laggards. U.S. tariffs on Chinese solar products, and possibility of further decoupling between Washington and Beijing, add to potential concerns for investors, along with all the usual risks of buying Chinese equities. Daqo New Energy is one of the leading and lowest-cost manufacturers of high-purity polysilicon for the global solar photovoltaic (PV) industry.

There is a delisting sword hanging over several Chinese stocks especially those that are listed as a VIE (variable interest entity). Alibaba’s consensus EPS revision trend has reversed to an upward increase in December, following months of decline. If the analysts continue to raise their forecasts, the revision factor grade could improve and trigger an upgrade to BABA’s quant rating. BABA stock’s relative resilience since the beginning of the year will help analysts tell a story of improved sentiment and should make them confident of increasing their forecasts. Archegos’ leveraged bets subsequently unraveled amid a heightened regulatory environment that had widened beyond Alibaba Group. Alibaba is a tech conglomerate best known for its online wholesale and retail businesses.

SA authors and Wall Street analysts expressed the same level of bullishness for JD as for BABA. After all, we know with the sustained downtrend in BABA, a ‘D’ grade for momentum is to be expected. The same goes for its declining growth rate and downward revisions over the past year. With the share price falling more than fundamentals, BABA avoided a worse grade for valuation. It is important to note that the overall quant rating is not an average of the factor grades listed. Instead, it gives greater weight to the metrics with the strongest predictive value.

New AI Stocks Infographic

While the US stock markets are having a splendid run in 2021, U.S.-listed Chinese stocks have underperformed. From China’s crackdown on tech companies, the slowdown in the Chinese economy, and US-China tensions, plenty of issues have been weighing down on Chinese stocks. Tencent is one of the largest firms in China with a market cap close to $700 billion. However, it doesn’t trade on any major U.S. exchange, so investors will have to dip into the pink sheets to get shares. Not all brokers will offer over-the-counter stocks, so be sure your broker has TCEHY shares before signing up.

In comparison, U.S. shares have a correlation of 0.943 compared to stocks in global equity markets. The combined market capitalisation of the exchanges in Shanghai, Shenzhen, and Hong Kong is US$17.88 trillion (as of January 2021). China’s combined capital markets places it in third position within the top 10 largest stock exchange operators, with the New York Stock exchange and Nasdaq of the United States leading the rest of the world. On the other hand, private Chinese companies which grow to significant levels often find themselves earning the ire of the government. However, the government of China isn’t intent on destroying all private ventures.

Exchange-traded funds​ are investment funds that hold a collection of underlying assets within the share market. An index ETF is often used as a benchmark for other indices of a specific sector, such as China’s tech industry. In particular, the Chinese search engine market share accounts for a large proportion of the overall stock market. China’s largest search engine is undoubtedly Baidu.com, which holds around 76% of all search revenue online. It is the second largest search engine in the world, after US tech giant Google. Baidu’s main rival in recent years is Qihoo 360 or 360 Search, whose visibility has rocketed and now claims a significant portion of the search engine market share.

In fact, one of the largest areas of growth for the company will be regional expansion outside of Southeast Asia. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia. And it also has all of the must have inductors and capacitors to make electric motors actually turn and move. So, take any technology product and TDK is what is inside or powering it to work.