Chinese Stocks Comeback
China stocks have taken a tumbling over the pasttwo years, however I believe that the worse is coming to an end. I will detail the reasons below:
1. Delisting Concerns Lessened
One of the main worries for Chinese ADRs is their possible delisting. However, recent developments show that Chinese and American regulators areclosely working together to solve audit issues. Chinese regulators have also expressed support for overseas listing. Even $DiDi Global Inc.(DIDIY)$which was at the heart of delisting troubles has now successfully delisted and continued trading on OTC
2. Tech Clampdown Near An End
Tech clampdowns have been another issue that has hampered many Chinese stocks. However, perChinese authorities, their investigations are ending and they will now be looking to promote the healthy development of the digital economy. Hence,Chinese stocks, especially tech will benefit from this.
3. Low Valuations
With concerns mostly cleared, Chinese stocks are still trading at extremely depressed valuations. This provides a long runway for recovery and there are two catalysts to this. First, as sentiment improves or more concrete support plans are revealed, Chinese stock prices will be lifted. Second, with an impending recession, we could be seeing money flow into the Chinese market as it is one of the most underpriced market globally now.
Possible Picks
Based on my own research, $Alibaba(09988)$and $BIDU-SW(09888)$are two good companies that will be at the forefront of this recovery. You can view my analysis here: https://seekingalpha.com/article/4510582-alibaba-and-baidu-at-the-forefront-of-chinese-stocks-recovery?source=all_articles_title
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Buy!