Is FXI iShares China Large Cap ETF A Good Buy?

🌟🌟🌟Chinese stocks in Hong Kong declined after the latest fiscal stimulus package from the Chinese authorities failed to excite investors.    FXI $iShares China Large-Cap ETF(FXI)$  seeks to track the investment results of an index composed of large cap Chinese stocks that trade on the Hong Kong Stock Exchange.

FXI dropped 3.6% on Tuesday trading and almost 4% in the past 5 days.  However FXI is still up 30% year todate and 16% in 2023.

Is FXI a good buy?

FXI represents 50 of the largest Chinese stocks in a single ETF.  The Top 10 holdings include Meituan, Alibaba, Tencent Holdings, China Construction Bank, Xiaomi, JD.com, Industrial & Commercial Bank, Ping An Insurance, BYD and Bank of China. 

The Top 10 holdings weightage is 59%.  Total number of holdings is 50.  The expense ratio is 0.74%.  Dividends are paid every 6 months.  The current dividend yield is 2.2%.  FXI goes ex dividend on December 17 2024.

Meituan $MEITUAN-W(03690)$  is the Top holding with 10% weightage in FXI.  Meituan is a Chinese shopping platform for local consumer products and retail services.  These include entertainment, dining, delivery, travel and other services.  Meituan's share price has dropped 5% on Tuesday trading and is down 8% in the past 5 days.  However Meituan is still up a huge 121% year todate. 

Alibaba $BABA-W(09988)$  is a Chinese conglomerate specialising in ECommerce, retail, Internet and technology.  Alibaba is scheduled to report its Q3 24 results on November 15 2024.  For their last quarter Q2 24, Alibaba reported earnings of USD 2.26 per share, beating analysts expectations of USD 2.20.  In the latest Q3 24 Earnings, analysts expect Alibaba to report earnings of USD 2.26 per share, reflecting a year over year increase of 5.61%.

Alibaba's share is down 3.7% on Tuesday trading and almost 6% in the past 5 days.  However Alibaba is up 21% year todate and in 2023 Alibaba has risen by 12%.

Tencent $TENCENT(00700)$  is a Chinese conglomerate and the world's largest company in the video game industry based on its equity investments.  Tencent's social media app, WeChat is the most popular social media platform in China with over 1 billion active users. 

Tencent's share price is down 2.2% on Tuesday trading and has dropped 5% in the past 5 days.  However Tencent is still up 36% year todate and 30% in 2023.  Tencent will be reporting its Q3 24 Earnings on November 13.

Xiaomi $XIAOMI-W(01810)$  is a Chinese manufacturer of Consumer Electronics, home appliances and EVs.  Its share price has been on a tear this year as it is up 20% in just 1 month and 83% year todate.  In 2023, Xiaomi has risen by 75%.

In April this year, Xiaomi launched its first EV - Xiaomi SU7.  The SU7 is very popular as it is priced at USD 4,000 less than Tesla's Model 3 and has a longer driving range.   Xiaomi is set to reach its delivery target for 100,000 EVs this year and has set a new target of 120,000.  Xiaomi has also taken 3rd place in the smartphone market globally with 13.5% market share according to Statista in 3Q 24.    Xiaomi is scheduled to report its Q3 24 Earnings on November 18.     The consensus forecast for Xiaomi's net profit is RMB 6.0 billion. 

In addition to the above outstanding Chinese stocks, 3 of China's Big 4 banks are in the Top 10 - China Construction Bank, Industrial & Commercial Bank and Bank of China.  They are the powerhouse of the Chinese economy. 

Wall Street Analysts are bullish on FXI with a Buy rating, Average Target price of USD 37.51, an upside potential of 23%.  This is according to 52 analysts surveyed by Tipranks. 

In the short term, FXI's shares maybe volatile, offering me a golden opportunity to buy more shares.   However in the long term, I believe that there is only 1 direction for FXI to move  and that is UP!   Compared to the US market which is currently overpriced, FXI is certainly undervalued and oversold. 

As Warren Buffett likes to say When there is Fear in the markets it is time to be greedy. 

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