In this article, we discuss the 10 best non-tech Chinese stocks to buy now. If you want to read about some more non-tech Chinese stocks, go directly to 5 Best Non-Tech Chinese Stocks to Buy Now.
Chinese stocks have been hammered in the past few months due to factors like concerns around delistings in the United States, a crackdown against local big tech from the government in Beijing, a spike in COVID-19 cases in China, and worries about the relationships of Chinese firms with Russian businesses amid Western sanctions on Moscow. A tangible indicator of this bearish outlook is the performance of the iShares MSCI China ETF (NASDAQ:MCHI), a fund that tracks the performance of big Chinese firms. The fund is down 16% in the past six months.
However, in mid-March, a report by Chinese news agency Xinhua indicated that a committee chaired by Chinese Vice Premier Liu He had instructed the central bank to actively roll out policies that benefit the market. The committee also pledged to keep the financial markets stable. The report served to boost the share price of major Chinese firms in the US. The iShares MSCI China ETF (NASDAQ:MCHI) soared as much as 12% in the week following the report.
Despite a change in tone from Beijing, experts have warned that the State Council of China may try to break up big Chinese tech firms. Dan Pipitone, the CEO of brokerage firm TradeZero, has said that the shorting community is now targeting Chinese stocks as rumors about the break up gather pace. In this context, investors are exiting tech firms and moving towards smaller, non-tech Chinese stocks. Some of the top non-tech Chinese stocks to buy now include KE Holdings Inc. (NYSE:BEKE), New Oriental Education & Technology Group Inc. (NYSE:EDU), and NIO Inc. (NYSE:NIO), among others discussed in detail below.
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Our Methodology
The companies that trade on exchanges in the United States but are based in China were selected for the list. The list was further refined by identifying the firms that operate in sectors other than technology. The analyst ratings, business fundamentals, and growth catalysts for the stocks are also discussed to provide some additional context for their investment decisions.
Hedge fund sentiment was included as a classifier as well. Data from around 900 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2021 was used to identify the number of hedge funds that hold stakes in each firm.
Best Non-Tech Chinese Stocks to Buy Now
10. Adagene Inc. (NASDAQ:ADAG)
Number of Hedge Fund Holders: 4
Adagene Inc. (NASDAQ:ADAG) is a clinical-stage biopharma firm that develops monoclonal antibody drugs for cancers. The company has recently signed important drug deals with giants like Sanofi and Merck. The former is a partnership for the development and commercialization of immuno-oncology drugs worth up to $2.5 billion. The latter is the regulatory clearance for trials related to the drugs for the treatment of solid tumors. Adagene will conduct the early stage trials along with Merck.
On February 1, investment advisory Morgan Stanley maintained an Overweight rating on Adagene Inc. (NASDAQ:ADAG) stock with a price target of $15. Analyst Matthew Harrison issued the ratings update.
At the end of the fourth quarter of 2021, 4 hedge funds in the database of Insider Monkey held stakes worth $5 million in Adagene Inc. (NASDAQ:ADAG), compared to 5 the preceding quarter worth $10 million.
Just like KE Holdings Inc. (NYSE:BEKE), New Oriental Education & Technology Group Inc. (NYSE:EDU), and NIO Inc. (NYSE:NIO), Adagene Inc. (NASDAQ:ADAG) is one of the Chinese stocks that elite investors are flocking to as a government-sponsored crackdown against dual listed firms ends.
9. China Life Insurance Company Limited (NYSE:LFC)
Number of Hedge Fund Holders: 5
China Life Insurance Company Limited (NYSE:LFC) operates as a life insurance firm. On March 25, the company posted earnings for the 2021 fiscal year, reporting a net profit of around RMB 50 billion. The revenue over the year was more than RMB 824 billion, up around 2.5% compared to the revenue for the previous fiscal year. The gross written premiums of the firm also increased by 1% year-on-year, counting at RMB 18 billion. Renewal premiums were almost RMB 442 billion, up close to 6% year-on-year.
China Life Insurance Company Limited (NYSE:LFC) stock had nosedived at the beginning of the year after the CEO of the firm, Wang Bin, was investigated as part of a corruption probe by Beijing in a wider crackdown that also hurt other dual-listed Chinese stocks. Reports indicate that the crackdown is now ending.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in China Life Insurance Company Limited (NYSE:LFC) with 148,100 shares worth more than $1.2 million.
At the end of the fourth quarter of 2021, 5 hedge funds in the database of Insider Monkey held stakes worth $48 million in China Life Insurance Company Limited (NYSE:LFC), compared to 8 the preceding quarter worth $52 million.
8. BeiGene, Ltd. (NASDAQ:BGNE)
Number of Hedge Fund Holders: 19
BeiGene, Ltd. (NASDAQ:BGNE) develops and markets therapies for cancer. On March 15, the company announced that Israel had approved Brukinsa, a drug developed by the firm for the treatment of B-cell lymphoma, for adult usage. The drug is already approved in around 45 markets around the world. In 2021, it generated global sales of almost $218 million for the Chinese biopharma firm. Earlier in March, the firm also got conditional approval for a solid tumor treatment in China for adults.
On March 25, Goldman Sachs analyst Ziyi Chen maintained a Buy rating on BeiGene, Ltd. (NASDAQ:BGNE) stock with a price target of $364.32, noting that the change of auditor and financial reporting from a China-based firm to a US-based one had removed regulatory overhangs on BeiGene and was a “significant positive” for the stock.
At the end of the fourth quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $4.8 billion in BeiGene, Ltd. (NASDAQ:BGNE), up from 16 in the preceding quarter worth $6.4 billion.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Baker Bros. Advisors is a leading shareholder in BeiGene, Ltd. (NASDAQ:BGNE) with 11.6 million shares worth more than $3.1 billion.
7. Li Auto Inc. (NASDAQ:LI)
Number of Hedge Fund Holders: 24
Li Auto Inc. (NASDAQ:LI) makes and sells electric sports utility vehicles. On April 1, the firm posted EV delivery numbers for March, reporting that it had delivered 11,034 models of the Li ONE in the month, up over 125% year-on-year. The figure takes the first quarter deliveries to around 31,700, up more than 152% compared to the deliveries in the first quarter of 2021. Since the debut of the Li ONE model in 2019, the company has so far delivered more than 155,000 Li ONE cars. Plans for a new car launch in mid-April are also underway.
On April 1, HSBC analyst Yuqian Ding initiated coverage of Li Auto Inc. (NASDAQ:LI) stock with a Buy rating and a price target of HK$135. Other investment advisors like China Renaissance and Morgan Stanley are also bullish on the stock.
At the end of the fourth quarter of 2021, 24 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Li Auto Inc. (NASDAQ:LI), up from 20 in the previous quarter worth $468 million.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in Li Auto Inc. (NASDAQ:LI) with 7.4 million shares worth more than $237 million.
6. Yum China Holdings, Inc. (NYSE:YUMC)
Number of Hedge Fund Holders: 26
Yum China Holdings, Inc. (NYSE:YUMC) owns and runs franchise restaurants. Some of the famous brands it runs in China include KFC, Pizza Hut, and Taco Bell, among others. On March 17, the firm announced that it was expanding a share buyback plan by $1 billion. The latest increase takes the aggregate buy back to around $2.4 billion. The CEO of the firm, commenting on the plan, said that it reflected the “strength of the balance sheet and the ability to generate strong cash flow”.
A rise in COVID cases in China had pushed restaurant stocks like Yum China Holdings, Inc. (NYSE:YUMC) lower in recent days but the sentiment around the firm has improved after the Chinese central bank vowed to “keep markets stable”, an indication that a regulatory overhang over dual-listed Chinese firms was nearing an end.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm GuardCap Asset Management is a leading shareholder in Yum China Holdings, Inc. (NYSE:YUMC) with 8.7 million shares worth more than $434 million.
At the end of the fourth quarter of 2021, 26 hedge funds in the database of Insider Monkey held stakes worth $842 million in Yum China Holdings, Inc. (NYSE:YUMC), compared to 30 in the previous quarter worth $832 million.
Along with KE Holdings Inc. (NYSE:BEKE), New Oriental Education & Technology Group Inc. (NYSE:EDU), and NIO Inc. (NYSE:NIO), Yum China Holdings, Inc. (NYSE:YUMC) is one of the Chinese stocks on the radar of institutional investors as growth stocks undergo a prolonged period of turmoil.
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Disclosure. None. 10 Best Non-Tech Chinese Stocks to Buy Now is originally published on Insider Monkey.
