Our Terms & Conditions | Our Privacy Policy
- Chinese stocks rally as government stimulus boosts investor confidence
- Goldman Sachs predicts further growth potential in China’s market
- Platforms such as Webull provide easy access to leading Chinese tech stocks
Special Report: Want to seize the opportunity in the booming Chinese tech sector? Platforms such as Webull make it easy for investors to get involved, allowing access to a range of leading Chinese stocks.
Chinese stocks have emerged as one of the top global investments in recent weeks after some solid government stimulus to boost the economy and restore investor confidence.
The CSI 300 index, which tracks the top 300 stocks on the Shanghai and Shenzhen exchanges, has jumped over 20% since September 13.
The MSCI China Index is also up around 30% so far this year, outpacing the US benchmark S&P 500.
The rally hit a bit of a bump last Monday after China’s top economic planner failed to deliver any new stimulus measure. Despite that disappointment, some experts are still feeling very optimistic about the Chinese market.
Goldman Sachs, for instance, is tipping that the recent surge in China’s stock market still has plenty of room to run, with another 15% to 20% on the upside.
According to Goldman, two main factors will continue to drive this rally: the market’s previous oversold conditions, and the possibility of additional stimulus measures that have been previously announced.
Goldman is referring to the broad range of policies rolled out by Beijing on September 24, which include, amongst others:
- A 20 basis points interest rate cut
- A 50-bps cut to banks’ reserve ratio
- Existing mortgage rate cuts
- Lower down payment requirements for second homes
- CNY 1 trillion for consumption support
- CNY 500 billion fund for big investors to exchange risky assets for safer ones
- CNY 300 billion loan program to help companies buy back their own stocks
China bulls are gaining momentum
Goldman also believes that while valuations of Chinese stocks have bounced back from a low of 8.4x forward earnings, they’re still below the five-year average of 12.1x.
Also, if the economy responds positively to those recent support measures, Goldman says earnings growth could pick up, and this could boost China’s GDP by 0.40%.
And lastly, with investment positioning still light, there’s potential for more market participants to push stocks higher.
“Valuations are still below the historical average, earnings may improve and global investors’ positioning remains light,” said the note from Goldman.
Meanwhile another notable investor – David Tepper of Appaloosa Management – said he was scooping up “everything” connected to China.
Tepper is just one of many China bulls. Nick Wilcox from hedge fund Man Group also believes Chinese stocks will keep rallying.
“We are currently seeing a relatively unique situation in the region whereby all of the main constituent parts – China, India and Southeast Asia – have the potential to deliver positive economic growth simultaneously,” said Wilcox.
Not everyone is bullish
But not all money managers are bullish on China, and many have questioned whether the rally can hold up.
A major sticking point is whether the Chinese government has done enough to bolster the real economy.
While the support for the stock market seems significant, some believe it lacks the tangible impact needed to drive genuine economic growth, some say.
Chinese phrases like “licking blood from the blade” (刀口上舔血) and “retrieving chestnuts from the fire” (火中取栗) have been circulating in Chinese media, according to TradingView’s Desmond Shum.
In the local context, those phrases refer to a classic pump-and-dump scenario, where traders are looking to cash in quickly rather than committing to long-term investments, Shum explains.
Where can Aussie trade Chinese stocks?
China’s stock market mainly features two key exchanges: the Shanghai Stock Exchange and the Shenzhen Stock Exchange – collectively known as A-shares.
Many Chinese stocks are also traded on global markets such as the Hong Kong Stock Exchange, the New York Stock Exchange, and the NASDAQ 100 via American Depositary Receipts (ADRs) – which makes it easier for foreign investors to buy.
Chinese stocks are made up of a variety of companies, from large state-owned firms to cutting-edge tech startups.
For Aussies, there are various ways to gain exposure to Chinese stocks.
One option is direct investment, where you can purchase shares through trading platforms such as Webull.
Webull allows you to open a share-dealing account to invest in a broad range of Chinese stocks and ETFs on the China mainland market (A-Shares), Hong Kong market, and obviously the US stock markets.
Some leading Chinese stocks to watch for
China’s tech sector has played a major role in powering the country’s economic growth, producing several companies that have become global leaders.
Here are some key Chinese tech stocks you might want to watch closely:
Alibaba Group (HKG:9988) and (NYSE:BABA)
Alibaba remains the dominant force in China’s e-commerce market, driving significant online retail activity in the country.
Despite facing regulatory scrutiny that has impacted its stock performance recently, the company’s extensive portfolio – including Alibaba Cloud, Alipay, and its entertainment platforms – positions it for long-term success.
Alibaba’s ongoing investments in AI and logistics technology, such as its smart logistics network, are expected to add to future revenues.
The company has also been focusing on expanding its international presence through initiatives like AliExpress, catering to global retail consumers.
Tencent Holdings (HKG:0700) and (OTCMKTS:TCEHY)
Tencent is a multifaceted tech titan, excelling in areas such as social media, gaming, and fintech.
The company’s WeChat is not just a messaging app; it’s a super app that integrates social networking, shopping, and payment services, boasting over a billion active users.
Tencent’s gaming segment, featuring blockbusters like Honor of Kings and PUBG Mobile, consistently generates solid revenue.
Also, Tencent is expanding into cloud computing and digital content, bolstering its ecosystem. With focus on metaverse development, Tencent could be well-positioned to capture future growth.
Baidu (HKG:9888) and (NASDAQ:BIDU)
Known as the “Google of China”, Baidu excels in search technology and is advancing rapidly in AI.
The company is heavily investing in autonomous driving through its Apollo project, which aims to develop self-driving technologies.
Baidu’s AI capabilities extend to various applications, including natural language processing and smart city initiatives.
Also, Baidu’s push into content creation with platforms like iQIYI, often referred to as the “Netflix of China,” is aimed at capturing the growing demand for streaming services.
JD.com (HKG:9618) and (NASDAQ:JD)
As China’s second-largest e-commerce platform, JD.com is recognised for its commitment to authentic products and state-of-the-art logistics.
Its vast network of warehouses and delivery services enables rapid order fulfilment, setting it apart from competitors.
JD.com has been expanding its offerings beyond e-commerce, delving into sectors such as healthcare with JD Health, which provides online medical consultations and pharmacy services.
The company is also focusing on technology services, including its cloud solutions that cater to businesses looking to digitise operations.
BYD Company (SHE:002594), (HKG:1211) and (OTCMKTS:BYDDF)
BYD is a major player in the electric vehicle market, known for its wide range of EVs, buses, and innovative battery technology.
The company’s Blade Battery is well regarded; and beyond cars, BYD is also active in solar energy and energy storage.
With growing international presence and partnerships, most analysts believe BYD is well-positioned to capitalise on the global shift towards electric mobility and clean energy.
XPeng (HKG:9868) and (NYSE:XPEV)
XPeng is another key player in China’s rapidly growing electric vehicle market, gaining traction with its advanced smart EV technologies and an expanding lineup of models.
The company places a strong emphasis on autonomous driving capabilities, integrating features such as adaptive cruise control and parking assist into its vehicles.
XPeng has also made investments in AI and connectivity, enhancing the overall user experience.
Bilibili (HKG:9626) and (NASDAQ:BILI)
Often referred to as the “YouTube of China”, Bilibili caters predominantly to younger audiences with its video-sharing platform.
It offers a mix of user-generated content, live streaming, and animations, fostering a strong sense of community among its users.
Bilibili’s unique “bullet comments” feature allows viewers to post comments that scroll across the video, creating an interactive viewing experience.
If you want to start investing in the high-growth Chinese tech giants like Alibaba and Tencent, download the Webull App for free today WeBull.
This article was developed in collaboration with Webull, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
SUBSCRIBE
Get the latest Stockhead news delivered free to your inbox.
It’s free. Unsubscribe whenever you want.
You might be interested in
Images are for reference only.Images and contents gathered automatic from google or 3rd party sources.All rights on the images and contents are with their legal original owners.
Aggregated From –
Comments are closed.