US-listed Chinese stocks had a bit of a meltdown on Monday. All bled profusely after President Xi Jinping’s pivot for absolute power saw him secure an unprecedented third term as Chinese leader. Stuffing his core team with yes-men and publicly humiliating his predecessor Hu Jintao by escorting him out of the Communist Party’s gathering, the market got jittery around concerns the far east giant is pivoting further away from policies which are seen as accommodating to markets, businesses and overall growth.
It’s not as if Chinese stocks were on the up beforehand, with many already retreating by large amounts over the past year. But with several Chinese tech giants hitting multiyear lows, the question is whether Chinese stocks have now hit rock bottom.
Investors scurried to the exit gates but calling the sell-off “disconnected from fundamentals,” J.P. Morgan’s chief global markets strategist Marko Kolanovic certainly thinks now is a good time to lean into Chinese stocks.
“China growth data surprised positively over the weekend, but their equity market is selling off strongly,” said Kolanovic. “We believe this is a good opportunity to add given an expected growth recovery, gradual COVID reopening, and monetary and fiscal stimulus.”
With this in mind, let’s delve into the TipRanks database and take a look at two stocks which sold off sharply but whose prospects remain sound, according to the experts. Alibaba shares fell by 12.5% in the rout, while Nio’s shed 16%. Both, however, are rated as Strong Buys by the analyst consensus and predicted to deliver triple-digit returns over the coming year. Let’s see why the analysts are getting behind these two beaten-down names.
Nio (NIO)
We’ll start in China’s fast-growing electric vehicle sector, where Nio has been delivering working EVs for the past four years. Currently, Nio has six EV models on the market, ranging from mid-size sedans to 5-seater SUVs, and the company has also pioneered Battery as a Service (BaaS) battery swapping technology to save customers time and money. Nio has benefitted over the past few…
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