Investors who have hung out in most Chinese stocks over the past few years have certainly been disappointed. Indeed, the rise of the U.S. equities market (with most indices now trading at or near all-time highs) is contrasted with relatively dismal performance for other major global economies such as China as well as most emerging markets. U.S. exceptionalism is a discussion topic I think we’ll hear a lot more about from investors over the course of the next year. And heading into what’s expected to be a bullish Trump presidency (for asset prices, at least), this is a trend that could continue.
Key Points About This Article:
- With Trump’s Inauguration Day quickly approaching on January 20th, investors are looking to rebalance their portfolios into assets that can outperform over the next four years.
- Here’s why I think these three Chinese stocks could be unique contrarian bets to play the idea that most of the bad news has been priced into these high-quality Chinese stocks.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
That said, Trump has remained very hawkish on China, espousing tariffs as a solution to bring more manufacturing jobs back home. Whether this is all simply hot air (rhetoric) or there’s going to be some teeth to these assertions, investors are on watch. For now, at least, the U.S. market seems off-limits for many Chinese companies, and higher tariffs could result in less goods and services sold from China into the U.S. for some time to come. That’s not good for Chinese stocks, and is a trend that’s clearly being priced into many of the best China-based companies out there.
Thus, my view is that ahead of the January 20th inauguration of Donald Trump, these three Chinese stocks could be worth considering as potential adds. I think investors may want to pay more attention to President Xi Jinping’s New Year’s address which highlighted the economy’s “upward trajectory,” than Trump’s rhetoric around how the country will become more insular. The reality is that China’s population is massive, and its middle class continues to expand. Until those fundamentals change, this is a market investors may want to stay exposed to (or gain some exposure to) when stocks are cheap, as they are now.
Alibaba (BABA)
Alibaba (NYSE:BABA) is certainly one of the top choices for investors looking at the Chinese market and its growth potential. This is a stock that has surged in the past, becoming one of the hottest IPOs in the market, and inviting many U.S. investors to consider the Chinese stock market, given the incredible growth potential of mega-cap giants like Alibaba.
However, since surging more than 350% to an all-time high in 2020, shares of Alibaba now trade just 23% above their 2014 IPO price. That’s incredible, as more than a decade of growth and market penetration has been fully discounted by the market, with many seemingly viewing the future with much less enthusiasm as they have in the past.
Alibaba is China’s largest e-commerce and cloud provider, playing a similar role in China as Amazon does in the U.S. market. The company’s impressive growth (both top line and in terms of profitability) has put this company within the blue-chip tier (in my view) of global tech giants worth considering, regardless of the price action around how its shares trade. Indeed, I view Alibaba’s recent decline (driven by regulatory crackdowns, post-pandemic economic struggles, and rising competition) as fully priced in, with recent Trump-related headwinds unlikely to shake the company’s underlying business.
As such, I think investors should expected Alibaba’s growth rebound in 2024 to continue in 2025 as the company benefits from strong overseas e-commerce growth in its Lazada, Trendyol, and AliExpress business lines. Despite sluggish domestic growth and trade war concerns under Trump’s incoming administration, Alibaba’s low valuation (less than nine times forward earnings) makes this stock a top pick of mine right now.
JD.com (JD)
JD.com (NASDAQ:JD) is another leading Chinese e-commerce giant, and is a company that’s much more heavily geared toward this particular market. The company can be viewed as another Amazon-like business in terms of its structure and e-commerce focus (with an extensive delivery network providing fast and reliable service), but it’s much more concentrated in this market, which can be a concern for some investors.
That said, JD’s primary market is the China, and the company continues to invest in enhancing its logistics, marketplace services, and supply chain solutions to drive efficiency and sustainability amid competitive and regulatory challenges. JD remains committed to long-term growth, including a $5 billion share repurchase plan, while aligning strategies with domestic policies.
JD’s focus on global partnerships and digital innovation is driving growth, and is expected to continue to drive growth well into 2025. This past year, the company saw its Singles Day sales rise more than 20%, driving strong Q3 results and allowing the company to indicate further investments in its core logistics and healthcare business lines. JD saw impressive performance in 2024 relative to its China-based peers, with shares of JD stock rising more than 20%, as investors continue to look for growth in one of the world’s most dynamic markets.
Bilibili (BILI)
Bilibili (NASDAQ:BILI) is a unique Chinese stock, in that it’s a tech company many investors are viewing as a compelling opportunity in 2025 as a future-forward firm.
The company produces a range of digital content, while also aggregating user-generated videos, which has proven to be a very lucrative high-growth space in recent years. The incredible increase in consumption for such videos among Gen Z and Gen Alpha has driven significant growth in advertising and e-commerce revenues, which Bilibili relies on.
The company has seen these underlying secular growth trends reflected in its recent Q3 results, with Bilibili reported total revenues of RMB 7.31 billion (approximately $1.04 billion), marking a substantial 26% increase from the previous year. This growth was primarily driven by a remarkable 84% surge in mobile gaming revenue and a 28% rise in advertising revenue, indicating strong demand across its core business segments.
Additionally, Bilibili achieved its first quarterly adjusted net profit of RMB 236 million, a significant turnaround from prior losses, which highlights improved operational efficiency and profitability. The company also boasts robust user engagement, with daily active users reaching 107 million and an average daily usage time of 106 minutes, reflecting its strong community presence among younger demographics.
Looking ahead, analysts project an average annual revenue growth rate of 11%, aligning with broader trends in the interactive media sector. With a new share repurchase program of up to $200 million, Bilibili is committed to enhancing shareholder value, making it a stock worth monitoring as it navigates the evolving landscape of digital entertainment in China.
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