Shares in Hong Kong and mainland China fell on Wednesday, as China’s Purchasing Managers’ Index (PMI) for manufacturing reflected a larger-than-anticipated contraction in May, increasing investors’ concerns about the road to recovery after stringent COVID restrictions hit the world’s second-largest economy significantly last year. The U.S.-listed shares of Chinese stocks traded mixed in Wednesday’s pre-market trading.
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As per the National Bureau of Statistics, China’s manufacturing PMI fell to a five-month low of 48.8, down from 49.2 in April and below expert’s forecast of 49.4. A reading below the 50-point mark indicates contraction. The non-manufacturing PMI, which reflects sentiment in services and construction sectors, declined to 54.5 in May from April’s 56.4. Further, factory output slipped to contraction from an expansion. New orders, including new exports, declined for the second consecutive month.
The weak PMI data, along with other economic indicators (like contraction in imports in April and weak retail sales), raise concerns about the recovery in China losing steam. This could ignite worries about demand and impact investor sentiment for the U.S.-listed shares of Chinese stocks, including Alibaba (BABA), JD (JD), NetEase (NTES), Baidu (BIDU), Nio (NIO), Bilibili (BILI), Trip.com (TCOM), Sohu (SOHU), and Li Auto (LI).
The list below, consolidated with the help of TipRanks’ Stock Comparison Tool, indicates that Wall Street has a Strong Buy consensus rating on several U.S.-listed Chinese stocks despite macro uncertainty. In fact, BABA, NTES, BIDU, and TCOM have a Strong Buy consensus rating based on unanimous Buy ratings from all the analysts covering these stocks.
However, analysts’ opinions might change if macro challenges continue to weigh on these companies for a longer-than-expected duration.
