Chinese stocks are staging a comeback. After being beaten down over the past two years by a Chinese government crackdown on publicly traded companies, particularly those listed on foreign exchanges, there are signs that the worst is over. Easing of Covid-19 restrictions and the reopening of China’s borders have also kindled hope that the Chinese economy and its private sector will resume their torrid pace of growth. That has led to a big reversal by Chinese stocks. The Nasdaq Golden Dragon China Index that tracks Chinese firms listed in the U.S. rose 13% in the first two trading days of the year. Through the first three weeks of 2023, the Golden Dragon index is up 15%. As the Chinese economy re-emerges, we offer the following three China stocks to buy on the dip or you’ll be kicking yourself later.
E-commerce giant Alibaba (NYSE:BABA) remains among the most widely held and respected of Chinese stocks. The company’s 2014 initial public offering (IPO) remains the largest ever held. And while BABA stock has been beaten down by Chinese authorities over the past two years, there are growing signs that the share price has bottomed and is on a bull run. Since the start of January, Alibaba’s stock has gained 30% . The share price looks to have bottomed at $63 last October.
With Chinese authorities signaling that their crackdown on technology companies is coming to an end, there are plenty of reasons to be bullish on BABA stock. Not only is the company the “Amazon of China” when it comes to e-commerce, but it is highly diversified with market leading positions in diverse areas such as online payments, cloud computing and artificial intelligence. Recent news that Ant Group, a fintech affiliate of Alibaba, has been given approval for capital expansion of its consumer finance unit has added to the rally.
The stock of Chinese electric vehicle maker Nio (NYSE:NIO) is also on an upswing lately having risen 27% since the year started. The rally is welcome news after Nio experienced a difficult 2022. Ongoing Covid-19 lockdowns hampered the company’s production and deliveries, leading to missed targets and shifting timelines that led to a steep selloff of NIO stock. Even with the New Year’s rally, Nio’s share price remains down 50% from a year ago.
However, there is reason for optimism as China eases up on its strict “zero Covid” policies, enabling Nio to put its vehicle manufacturing into high gear. Its sales this year should get a boost from the launch of two new electric SUVs last month as well as several new electric vehicles that are slated to be introduced later this year. Plus, Nio continues to expand in Europe as it diversifies beyond its home market.
Many analysts believe that Nio will become a major rival of Tesla (NASDAQ:TSLA) in the years ahead.
The stock of technology giant JD.com (NASDAQ:JD) has not rallied as aggressively as BABA or NIO in recent months. However, the shares of JD.com are starting to move in the right direction.
Since the start of January, JD stock has gained 6%. That could be the start of a big run for the Beijing-based company that, like Alibaba, is focused on e-commerce and so much more. Beyond selling online merchandise, JD.com is also involved in artificial intelligence, drones, robotics and self-driving cars.
JD.com currently operates the largest drone delivery system in the world and is building drone delivery airports throughout China. The company is also commercializing a driverless delivery truck.
Like other publicly traded technology companies, JD.com was singled out for punishment by the Chinese government over the last few years and shareholders suffered. But with the government crackdown ending, there is hope that JD.com will now be able to focus on bringing more of its innovations to market, driving its sales higher in the process.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.