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Grupo QI

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Thomas Richardson
Thomas Richardson

Buy Chinese Stocks

Granted, with such a stratospheric performance, many prospective investors may be worried about holding the bag. However, VIPS represents one of the cheap Chinese stocks to buy on an objective basis. Currently, the market prices shares at 12.1-times trailing earnings, below the sector median of 15.8 times. Moreover, VIPS trades hands at 8.5-times forward earnings, well below the sector median of 15.3 times.

buy chinese stocks

Just as well, Wall Street analysts appreciate Vipshop, assigning VIPS a consensus moderate buy view. Along with strong stability in the balance sheet and a profitable business, VIPS still ranks among the cheap Chinese stocks to buy despite its recent upside.

Granted, this storyline alone might not be enough to convince investors to take a shot. That said, the market prices NOAH at a hair over 8-times trailing earnings. This slips below the sector median of 11.5 times. Thus, from an objective view, NOAH is one of the cheap Chinese stocks to buy.

At the same time, analysts rate DQ as a moderate buy. Further, their average price target implies over 38% upside potential. Even better, Daqo features a forward multiple of 2.45, well below the sector median of 18.6 times. Thus, for risk takers, DQ may be one of the cheap Chinese stocks to buy.

As it relates to cheap Chinese stocks to buy, Wall Street prices FINV at just under 4-times forward earnings. In contrast, the sector median stands at 7.73 times. Just as well, FinVolution features a strong cash-to-debt ratio and an excellent long-term growth trend. Plus, it commands a return on equity of 21.6%, signifying extremely high business quality.

China is the world's No. 2 economy and home to dozens of companies that trade in the U.S. Right now, Baidu (BIDU), (TCOM), Tencent Holdings (TCEHY), Li Auto (LI) and NetEase (NTES) are China stocks worth watching or potentially buying.

It's been a tough couple of years for Chinese stocks. The Covid pandemic, and Beijing's zero-Covid policy, have slammed the economy. Meanwhile, regulatory crackdowns vs. technology and data-centric firms such as Alibaba (BABA), Tencent (TCEHY) and NetEase (NTES) have been a major headwind. The tech crackdown seems to have eased. But Covid restrictions have largely been rolled back, raising hopes for stronger growth as 2023 goes on.

But after a long stretch where it was difficult to find five top China stocks to buy or watch, a growing number of Chinese companies are setting up. Tesla (TSLA) rival BYD (BYDDF), Vipshop (VIPS) and BABA stock are among others close to buy points.

Active foreign fund managers put $1.39 billion into mainland Chinese stocks in the four weeks ended Jan. 25, EPFR data showed. Active fund inflows into Hong Kong stocks were even greater during that time, at $2.16 billion.

The money is coming in faster than it did in early 2022, Shen said. At the time, a few institutional investors had said it was time to buy Chinese stocks due to Beijing's emphasis on stability in a politically important year.

While real estate and renewable energy-related sectors are seeing interest, tech has been relatively quiet, EPFR's Shen said. He said inflows were also less aggressive when it came to U.S.-listed Chinese stocks.

Recent enthusiasm about Chinese stocks also follows a rocky two years in which the abrupt suspension of Ant Group's IPO, a crackdown on tech and real estate businesses and stringent Covid controls weighed on sentiment.

Hundreds of Chinese companies are listed on U.S. markets. But which are the best Chinese stocks to buy or watch right now? Among the best are Nio (NIO), Daqo New Energy (DQ), Li Auto (LI), Pinduoduo (PDD) and BYD Co. (BYDDF).

China is the world's most-populous nation and the second-largest economy, with a booming urban middle class and amazing entrepreneurial activity. Dozens of Chinese stocks are often among the top performers at any given time, across an array of sectors.

Start with companies with strong earnings growth. If they're not profitable, at least look for rapid revenue growth. The best China stocks should have strong technicals, including superior price performance over time. But we'll be highlighting stocks that are near proper buy points from bullish bases or rebounds from key levels.

One of the early positive turns on mainland Chinese stocks came from BlackRock Investment Institute in late September. As 2022 got underway, other firms also made similar calls, while others remain neutral.

They pointed to expectations for growth in new financing, easier monetary policy and more attractive stock valuations relative to the rest of the world. Other factors included a rare opportunity to pick stocks, growing foreign inflows and increased earnings.

"Yes, China is struggling with growth and a stronger USD is not good news for China's stock markets," the analysts said. "But that's now well-known and is priced in. Even good, blue chip stocks are now trading at attractive valuations."

Despite disappointing U.S. stock market performance in 2022, you can at least take some consolation if you didn't hold any Chinese stocks this year. When you look at U.S.-listed stocks with a market value of at least $2 billion, there are only a handful of companies headquartered in China that have positive returns year to date in 2022 as of market close on Nov. 18. But as they say, past performance is not indicative of future return, and now may be a great time to bank on a turnaround in Chinese stocks as lingering pandemic restrictions are finally lifted. If you aren't afraid of the risk in this emerging market, here are seven potential winners in China to consider.

Solar energy player Daqo is technically a semiconductor manufacturer, but it is also a green energy company thanks to its focus on photovoltaic products. Based in Shanghai, DQ has close relationships with top policymakers in China who are eager to wean the country off fossil fuels and help clean up the nation's poor air quality in some of its larger and more polluted cities. With a command-and-control central government, it's hard to imagine that China won't rely heavily on home-grown Daqo in the years ahead. Shares are up 31.7% this year as proof that this durable long-term opportunity in DQ outshines other Chinese stocks that have seen trouble in 2022.

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10 stocks we like better than WalmartWhen our award-winning analyst team has an investing tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Walmart wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Chris Hill: I'm doing all right, because the MSCI Asia Pacific index hit a high today that is more than 20 percent higher than the low it hit last October, which means it is officially in bull market territory. Is it time to start buying China stocks left and right?

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However, leading banking experts and investors view the most significant legislation as having passed and are now being implemented. Therefore, they predict that investors are preparing to jump into Chinese technology stocks. For example, the CEMAC-GS Leading Index is anticipated to grow by 13-30% in 2022.

Disclaimer: The information in this article has been researched to the best of our knowledge and provides an overview of the topic of investing in Chinese stocks as of Q1/2022. As government rules may change and investment tactics depend on your very specific personal situation and knowledge, this article shall NOT be viewed as financial or investment advice.

CSI 300 Index: The CSI 300 is the leading stock market index in China, depicting the performance of the top 300 stocks traded on the Shanghai Stock Exchange and the Shenzhen Stock Exchange. It has two sub-indexes: CSI 100 and CSI 200.

Professional foreign investors however can invest in Chinese companies through ADRs, ETFs, mutual funds, A Shares (through the QFII program), B Shares, H Shares (Hong Kong-listed Chinese stocks), VIEs, and by collaborating with Chinese businesses in mainland China. Except for B Shares, private foreign investors cannot trade at Chinese stock exchanges.

Widely regarded as the most successful investor worldwide, Warren Buffet started investing in Chinese stocks in 2005, and now holds shares of BYD (manufacturer, including electric vehicles) and CATL (electric vehicle battery manufacturer) among others.

In mainland China, there are three main stock exchanges: Beijing, Shanghai, and Shenzhen. In the Greater China Area, the Hong Kong and Taiwan stock exchanges are most noteworthy for investing in Chinese stocks.

The Shenzhen Stock Exchange (SZSE) was founded in 1990 and lists a variety of market indices with different market positioning. The SZSE focuses on Blue Chip stocks (large well-established companies with an excellent reputation) with high market capitalization.

Generally, the banking sector is a solid choice for value investors, who seek stocks that trade for less than their intrinsic value. Besides, the banking sector pays dividends, which provides investors with a share in profits. 041b061a72

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