Chinese Stock Market: Top 5 Stocks To Watch

/ 12:58 AM January 22, 2019

Here is a list of the 5 best Chinese stocks in the Chinese stock market:

  1. Alibaba (BABA)
  2. Sina (SINA)
  3. NetEase (NTES)
  4. Yum China (YUMC)
  5. Baozun (BZUN)

Alibaba, Sina, NetEase, and Baozun are internet stocks while Yum China is a fast-food corporation. All of these companies have experienced tremendous growth, and they offer investors unique opportunities for quality investments in China, so let’s examine each one.

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Alibaba (BABA)

Alibaba is a Chinese corporation that focuses on the internet and technology. It provides a wide variety of services and solutions for online and mobile commerce. It operates in four segments: cloud computing, innovation initiatives, core commerce, and digital media and entertainment.

Current Situation

Over the last few years, this company has introduced several new offerings and has invested in AI technologies and big data. However, one of its main competitive advantages is that it has expanded on a global basis.

Various partnerships and acquisitions have aided this corporation by diversifying its numerous business endeavors. For instance, Alibaba invested in MariaDB, which is a database management system, and this arrangement has allowed these two corporations to work together on new products.

Future Speculation

Alibaba’s cloud computing has an enormous potential for growth. This is primarily because of its massive portfolio of products and its tremendous IoT capabilities. When you consider these factors, this internet giant may be a sensible investment option for tech investors, especially those looking for exposure to the growing Chinese digital marketplace.

Sina (SINA)

With over 100 million users, Sina is a Chinese technology corporation that has four major businesses: Sinanet, Sina Mobile, Sina Weibo, and Sina Online.

This company provides internet services to Chinese people all over the world. Its various departments focus on things like tech, sports, fashion, travel, entertainment, finance, and news.

Its wide selection of services includes search, games, mail, blogging, and microblogging. Chinese celebrities use the company’s microblogging services to connect with their legions of followers and fans.

Current Situation

The company’s stock price has fallen by approximately $50 since its peak in early 2018; however, it has rebounded it the last few weeks. The main reason for this drop is because of skyrocketing expenses.

Many analysts are now claiming that the stock is undervalued at its current levels.

Future Speculation

You should also realize that there is quite a bit of good news for both investors and potential investors. First, short interest is low with less than one percent of its shares on loan. This means that those who look to profit from falling prices are not considering Sina as a target.

In addition, ETF activity is positive. Over the last several weeks, the growth of ETFs containing SINA has been increasing.

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It is also worthwhile to note that Sina is developing a “pay-for-forward” feature that will allow for users to have messages forwarded by an account with a large following.

With all of this positive information, it is easy to speculate that this company may be a worthy investment for long-term investors that want exposure to equities traded on the Chinese stock market.

NetEase (NTES)

NetEase is a Chinese internet technology company that delivers services focused on content, commerce, and communications. It operates and develops computer games and e-commerce platforms in China.

Current Situation

Because of the success of “Justice,” “Survival,” “Night Falls,” and “Ancient Nocturne,” four of the games launched by the company, its revenue has increased substantially. Helping NetEase with the success of these offerings is the speculation that regulatory pressures on the Chinese gaming sector may be easing.

Future Speculation

Because of the wide variety of games that the company offers, many stock experts are expecting the company to have continued success for some time to come. Some American analysts have boosted their price targets by as much as ten percent.

It is also widely expected that “Diablo Immortal,” a new game that will be launched by the company in 2019 will also boost revenue.

Because of the wide array of games and continual releases of new titles, Netease may be a good choice when considering investments in the Chinese stock market.

Yum China (YUMC)

With over 7,600 restaurants, Yum China is a fast-food company incorporated in the U.S. with headquarters in Shanghai. Employing well over 400,000 workers, it owns and operates Taco Bell, Kentucky Fried Chicken, and Pizza Hut restaurants in China. In 2016, it was spun-off from YUM brands, an American corporation.

Current Situation

The company is using the power of Kentucky Fried Chicken and Pizza Hut to lead its path of future expansion. In addition, Yum China is focused on technological developments and new menu innovations to support additional revenue.

Over the last few years, its share’s prices have increased over 25 percent. This is because its earnings continually beat estimates.

Future Speculation

It appears as though this company has the potential to triple the number of its restaurants because the spending ability of China’s middle-class is growing.

It is constantly creating new menu items such as stuffed chicken wings and crayfish burgers. These new offerings are helping to increase sales, which are being increased due to an expanding customer base. Its increased focus on content marketing is also assisting with this consumer growth.

Its delivery services now account for approximately one-fifth of the company’s sales, and this is yet another reason why this company’s stock will probably continue to perform well on the Chinese stock market throughout the rest of the year.

Baozun (BZUN)

Baozun is an e-commerce solutions company and is involved with providing end-to-end solutions, including those involved with sales, merchandising, marketing, warehousing, and customer service.

Baozun provides solutions for Western companies looking to quickly enter the Chinese market.

Current Situation

In the past few quarters, this stock was heavily shorted, and this is probably one of the main reasons why the stock has been declining.

In addition, sales have fallen, and so the equity’s loss of approximately 50 percent since its lifetime highs in 2018 could be seen as a natural reaction to all of these conditions. However, the stock has rebounded in the last several weeks.

Future Speculation

Despite these downfalls, it would appear as though the worst may be over, and the company will be able to recover. Many financial analysts who examine the Chinese stock market also agree with this speculation because a lot of them are suggesting that shares of Baozun will double in 2019.

Conclusion

Many companies listed in the Chinese stock market (especially those involved with the internet) are now experiencing phenomenal growth, and these five stocks are among the drivers leading the way. Therefore, it might be wise to do some careful research and consider investing in one or more of them.

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