Key Points
- Confidence and capital return to Chinese stocks after years of market losses, geopolitical tensions, and a property crisis.
- China's economy experienced a notable growth of 5.3% in the first quarter of 2024, signaling a positive trajectory and a potential turnaround.
- Heavyweight Chinese stocks listed in the United State, such as JD, BABA, and BIDU, have rebounded recently and outperformed.
After consecutive years of market losses in China, geopolitical tensions, and a lingering property crisis, many U.S. asset managers are now showing confidence in Chinese stocks, highlighting potential opportunities. In March, billionaire investor Ray Dalio suggested that China presents an opportune moment for investment due to its affordability.
Heavyweight Chinese stocks listed on the U.S. exchanges recently hit bottom and surged higher, presenting a promising risk-reward proposition. Once deemed uninvestable due to economic challenges, China's stock market has experienced a notable resurgence, with the MSCI China Index surging 20% from its bear market lows.
Factors contributing to this turnaround include Beijing's efforts to revitalize the economy by restricting short-selling and promoting new real estate strategies. Despite earlier concerns about China's economic outlook, foreign investors are returning to their markets, buoyed by a 5.3% economic growth in the first quarter of 2024.
With this backdrop, it's worth exploring whether it’s time to buy oversold Chinese stocks that have recently rebounded, such as Alibaba Group NYSE: BABA, Baidu NASDAQ: BIDU, and JD.com NASDAQ: JD.
Alibaba Group Holding Limited
$88.54 +1.84 (+2.12%) (As of 05/17/2024 ET)
- 52-Week Range
- $66.63
▼
$102.50 - Dividend Yield
- 1.11%
- P/E Ratio
- 20.64
- Price Target
- $109.96
However, the stock has recently broken its downtrend and turned positive on the year thanks to its 13.05% surge higher this month. Notably, the stock has reclaimed all major moving averages, including its 200-day Simple Moving Average (SMA). Despite its recent rebound, the stock is 20.65% below its 52-week high and has a modest P/E of 14.81. Analysts are bullish on the name, with a Moderate Buy rating and consensus price target that forecasts an impressive 38.8% upside for the eCommerce giant.
Baidu, Inc.
$110.58 -2.01 (-1.79%) (As of 05/17/2024 ET)
- 52-Week Range
- $94.25
▼
$156.98 - P/E Ratio
- 14.80
- Price Target
- $162.00
Like BABA, shares of Baidu recently broke its major downtrend thanks to an impressive 12.8% surge higher last week. Baidu, which is almost 28% below its 52-week high, has an attractive P/E of 14.5 and is a favorite among analysts. Based on 15 ratings, the stock has a consensus Buy rating and consensus price target of $171.64, which forecasts a whopping 51.3% potential upside for the online search giant.
JD.com, Inc.
$35.27 +1.00 (+2.92%) (As of 05/17/2024 ET)
- 52-Week Range
- $20.82
▼
$41.95 - Dividend Yield
- 2.10%
- P/E Ratio
- 16.11
- Price Target
- $37.47
Shares of JD have not only outperformed the overall market recently but have also been one of the top-performing Chinese stocks in recent months, surging by over 50% in the quarter so far. The company, which has a $51.8 billion market capitalization, offers a 2.25% dividend yield, an attractive P/E of 15.43, and projected earnings growth of 13.33% for the full year. Like the stocks mentioned above, JD is a favorite among analysts. The stock has a Moderate Buy rating and consensus price target predicting over 8% upside.
Looking to avoid the hassle of mudslinging, volatility, and uncertainty? You'd need to be out of the market, which isn’t viable. So where should investors put their money? Find out with this report.
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