Tech Stocks Worth Buying as Earnings Kick Off

There are lots of good reasons not to buy tech stocks right now. And, amid a difficult economic environment, the coming earnings season is likely to signal more trouble. But as experienced investors know, the time to buy stocks is when conditions are at their worst.

This is the time to follow the timeless advice of the Hall of Fame outfielder “Wee Willie” Keeler: “Hit ’em where they ain’t.”

One place they ain’t is China, and the latest economic data show why: On Friday, the country reported just 0.4% gross-domestic-product growth in the second quarter. It’s China’s slowest growth since the first quarter of 2020—the early days of the pandemic—and a reflection of the recent two-month lockdown in Shanghai and other regions.

Markets aren’t exactly full of optimism about China, but Mizuho analyst James Lee thinks it’s time for investors to take a fresh look at China’s internet sector. The

KraneShares CSI China Internet
exchange-traded fund, a popular way to track Chinese internet stocks that’s better known by its ticker KWEB, has lost about two-thirds of its value over 18 months. It’s been pressured by the Chinese government’s crackdown on the tech sector and rolling factory shutdowns tied to the country’s zero-Covid policy.

China’s economy has been battered by Covid outbreaks, rising unemployment, and a slow property market. Lee notes that the jobless rate in major Chinese cities hit 6.9% in May, the highest since 2018. But he thinks China offers investors a solid foundation from here, with a strong consumer savings rate, low inflation, and a favorable rate environment.

While the U.S. is trying to slow the economy down, China is turning more stimulative. It has offered tax credits to businesses and eased Covid restrictions. The country is offering “consumption vouchers” to about 40% of the population that can be used to make purchases online at discounts averaging 20%.

Lee suggests investors keep an eye on two upcoming events: China’s National Economic Council meeting in late July could…


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