💰4 Charts Help You Find Undervalued Chinese Stocks & ADRs

I. Chinese stocks have been on a continuous upward trend for a month, with Wall Street institutions turning bullish

Chinese stocks have been on an upward trajectory for nearly a month since January 13. The $iShares MSCI China ETF(MCHI)$ has seen gains for four consecutive weeks since mid-January, with a rise of over 4% since February, significantly outperforming other markets such as the United States and Japan.
Market revaluation driven by technological breakthroughs: The launch of DeepSeek's breakthrough low-cost AI model has become a crucial catalyst for global investors to reassess Chinese assets. The model's high efficiency and open-source nature have been favored by many Chinese companies, fueling the popularity of related concepts and changing the market's perception of the competitiveness of China's tech industry.
As of February 10, since January 1, the China Internet ETF $KraneShares CSI China Internet ETF(KWEB)$ has risen by 10.81%. The triple leveraged Chinese stocks $Direxion Daily FTSE China Bull 3X Shares(YINN)$ have surged by 12.87%. The top four most valuable Chinese stocks have all seen double-digit gains: $Alibaba(BABA)$ , $PDD Holdings Inc(PDD)$ , $NetEase(NTES)$ , and $JD.com(JD)$ .
$Tuya Inc.(TUYA)$ has seen a rise of over 96.65%, and $Kingsoft Cloud Holdings Ltd(KC)$ has risen by over 60%. Other popular Chinese stocks such as $XPeng Inc.(XPEV)$ and $Tiger Brokers(TIGR)$

The Chinese stock market has recently shown strong performance, attracting the attention and capital inflows of hedge funds.

According to Goldman Sachs Prime Services data, there was a moderate net buying of Chinese stocks (both onshore and offshore) in January, with a recovery in risk appetite.
Since the artificial intelligence company DeepSeek released significant news on January 27, there has been a $3 billion capital outflow from emerging Asia outside China, mainly from the markets of South Korea and Taiwan, China.

Chinese stocks and related concepts have also been widely favored by several top Wall Street strategists, who have indicated that the new technological capabilities in artificial intelligence will help sustain the bull market.

II. Where to Find "Undervalued Chinese ADRs"?

Due to objective circumstances, Chinese ADRs have been "placed" in a value trough for a period of time. For example, the price-to-earnings (P/E) ratios of many Chinese stocks are at relatively low levels: the P/E ratio of $Tencent Holding Ltd.(TCEHY)$ is around 21, $Alibaba(BABA)$ is approximately 20, and $PDD Holdings Inc(PDD)$ may even drop to a P/E ratio of 12.

@Tiger_Contra have specially compiled some data from Bloomberg, based on the perspective of cash equivalents exceeding market value, we have identified at least 74 (non-OTC) Chinese ADRs, among which 25 have a market value greater than $100 million.
In the market performance over the past month, the majority of these stocks have shown an upward trend.
Note: Undervaluation is not an absolute indicator of stock price potential. It is still necessary to consider the long-term development based on the fundamentals.

Refer to Chart 1: Top 10 Chinese ADRs by Market Cap with Cash Equivalents Exceeding Market Value

Among them, $JD.com(JD)$ , $Vipshop(VIPS)$ , $GDS Holdings Ltd(GDS)$ , $RLX Technology(RLX)$ , $iQiyi Inc.(IQ)$ and $FinVolution Group(FINV)$ have achieved double-digit returns since January 2025. $Li Auto(LI)$ and $Lufax(LU)$ have risen by nearly 5%. $NIO Inc.(NIO)$ , $Bilibili Inc.(BILI)$ and $Hello Group Inc(MOMO)$ still have negative returns.

Refer to Chart 2: Another 10 Chinese ADRs by YTD2025 with Cash Equivalents Exceeding Market Value

Among the 25 Chinese stocks with a market value greater than100million, excluding the five companies mentioned above with double−digitgains,the following 10 Chinese ADRs have achieved positive returns in 2025:

$Dada Nexus Limited(DADA)$ , $DouYu(DOYU)$ , $Yiren Digital(YRD)$ , $Baozun(BZUN)$ , $Cheetah Mobile(CMCM)$ , $Huya Inc.(HUYA)$ , $QuantaSing Group Limited(QSG)$ , $Zhihu(ZH)$ , $ATRenew(RERE)$ and $Daqo New(DQ)$

The remaining five companies with a market value exceeding 100 million and cash equivalents surpassing their current market value are $ZKH Group Ltd.(ZKH)$ , $Greentree Hospitality Group(GHG)$ , $Dingdong (Cayman) Limited(DDL)$ , $Noah(NOAH)$ ,and $JinkoSolar(JKS)$

Feel free to comment and share more undervalued ChineseADRs for further discussion.

III. The AI Technology Wave Continues, Surpassing the 2021 "Meme Stock" Frenzy—Get on Board?

In the entire US stock market, hedge funds are increasing their holdings in China while fleeing the South Korean stock market. After being sold off for 5 consecutive weeks, US stocks are now being aggressively bought at the bottom, especially in the IT sector, where net purchases have reached the highest level in four years.

Looking at the industry allocation adjustments:

Technology Sector:

Hard Tech vs. Soft Tech: Over the past three months, the allocation of emerging market and Asia mutual funds has been gradually shifting from hard tech to soft tech, a trend that has become more pronounced following the significant announcement by DeepSeek.
US Information Technology Sector: The information technology sector became the most net-purchased industry last week, with net purchases reaching the highest level since December 2021 and the second-highest level in the past five years. This was primarily driven by short covering and long positioning.
Other Sectors: In the US stock market, the consumer discretionary sector has been net-sold for the seventh consecutive week, making it the most net-sold US sector this year.

Looking at the investment behavior of different entities:

Hedge Funds:

US Stocks: Hedge funds have been buying US stocks daily last week at the fastest pace since early November last year, with net purchases of individual stocks reaching the highest level in over three years.
China: Although hedge funds have made moderate net purchases of Chinese stocks, the allocation to China in global Prime books remains near a five-year low.
Retail Investors: Before the large-scale buying of US stocks by hedge funds, retail investors had already taken the lead in bottom-fishing, with a level of buying enthusiasm that even exceeded the peak of the 2021 "meme stock" frenzy.

The above is Tiger_Contra’s observation on the current surge in Chinese stocks listed in the US. Chinese stocks listed in the US do have certain investment value in the current market environment, especially driven by technological innovation, policy support and expectations of economic recovery.

A tool for SG Tigers that you can use to make your investments more efficient.

Join now to open a CBA today and Enjoy SGD 20,000 for upcoming 0 Commision trading on US, HK, SGX Equities and ETFS. Find out more here.
Other helpful links:

Like and subscribe to @Tiger_Contra . Never miss a beat in the market!

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

To The Moon