There are some troubling signs coming out of the Chinese stock market. But one of the darkest signs comes from watching the CSI 300 index, an index that follows the 300 leading stocks of both the Shenzhen Stock Exchange and the Shanghai Stock Exchange, which continues to fall.
Baidu (NASDAQ:BIDU), JD.com (NASDAQ:JD), and the Kraneshares CSI China Internet ETF (NYSEARCA:KWEB) are all down fractionally in Friday afternoon’s trading, while Tencent Holdings (OTC:TCEHY) is down around 1.5%. The only one to buck the trend, Alibaba (NYSE:BABA), is up, but only fractionally in the session.
With the CSI 300 down to a four-year low in just last week’s trading, it’s not surprising to see many of the firms comprising that average taking a pounding from investors. Analysts, however, are surprisingly upbeat. Alibaba again bucked the trend, with analysts suggesting that it may be risky, but it might be a good long-term play. Baidu, in an interesting twist, is considered “incredibly cheap” with some exciting potential in the AI space. JD.com’s share price is considered wildly undervalued by multiple analysts, and even Tencent was called out for its positive cash flow and solid management.
The Macro Picture, However, is Shakier
A look at the macroeconomic picture prompts some concerns. After all, Chinese stock markets, in general, are still in a clear decline as a range of government policies—from draconian COVID-19 lockdown policies to even the one-child policy—come back to haunt the economy. China’s official score of the economy, which it said expanded 5.2% in 2023, faces challenge from analysts like the Rhodium Group, who suggests the actual number is closer to 1.5%.
Worse, attempts to inspire confidence in the economy aren’t going so well at all, as platitudes about opportunity over risk at Davos don’t connect with investors or open wallets.
Which Chinese Stocks are a Good Buy Right Now?
Turning to Wall Street, the leader among the group right now is JD stock, as this Moderate Buy offers a 72.21% upside potential against its $40.96 average price target. Meanwhile, the laggard is TCEHY stock, as this Moderate Buy with a $52.08 average price target can only offer investors a 42.88% upside potential.
