In this article, we discuss the 10 Chinese stocks that could rebound in 2022 according to analysts. If you want to skip our detailed analysis of the Chinese economy, go directly to Analysts Think These 5 Chinese Stocks Could Rebound in 2022.
Chinese companies have been in hot water for quite a while, due to China’s restriction on its technology sector, limitations in subsidies to the EV market, and nationalization of its private education sector, in addition to COVID-19 headwinds, global supply chain disruption, and power shortages. As tensions between Beijing and Washington increase, it is a common perception of many investors that the US listed Chinese companies might be delisted in the upcoming years. Big Chinese companies already taking out dual listings at the Hong Kong Stock Exchange has only added to investors’ paranoia.
James Liu, founder and head of research at Clearnomics, noted that Chinese companies account for some of the biggest names across multiple industries, including tech, semiconductors, financial technology, and automobiles. Investors need exposure to these sectors and Chinese stocks offer attractive valuations due to the market concerns surrounding these companies, hence it is a great buying opportunity.
Kristina Hooper, the chief global market strategist at Invesco US, is bullish on Chinese equities due to never-seen-before valuations and the view that Chinese regulations are coming to an end, rather than starting anew. In addition to that, the Chinese government and central bank is loosening its money controls, and interest rate cuts will only make these equities more appealing. The interest rate hikes by the Fed can also be managed by emerging market equities according to Hooper, since the monetary environment in the United States is quite accommodative and Chinese companies have a strong monetary position to weather the rate hikes.
Some of the most notable Chinese stocks that analysts believe could rebound in 2022 include Bilibili Inc. (NASDAQ:BILI), Alibaba Group Holding Limited (NYSE:BABA), and JD.com, Inc. (NASDAQ:JD).
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Our Methodology
We listed Chinese securities that are expected to rebound in 2022 according to market analysts, after thoroughly searching for positive analyst ratings and solid future projections for Chinese equities by well known market investors and analysts. We have ranked the stocks according to the hedge fund sentiment, which was gauged from the 867 elite funds tracked by Insider Monkey in Q3 2021.
Analysts Think These Chinese Stocks Could Rebound in 2022
10. Tencent Holdings Limited (OTC:TCEHY)
Number of Hedge Fund Holders: 4
Tencent Holdings Limited (OTC:TCEHY) is a Chinese multinational holding company which is a market leader in the technology, entertainment, and gaming industries. In addition to being one of the most financially valuable global companies, Tencent Holdings Limited (OTC:TCEHY) is a market giant that offers services including social networks, e-commerce, video games, internet services, payment systems, smartphones, and multiplayer online games. Tencent Holdings Limited (OTC:TCEHY) is positioned to be the largest Chinese metaverse stock.
Although Tencent Holdings Limited (OTC:TCEHY) stock dropped over 35% in the last 12 months, the company is poised for recovery in 2022 according to analysts. While the stock fell when the Chinese tech crackdown impacted its gaming division and the nationalization of private education in China led to lower ad revenue from private educational institutes on Tencent Holdings Limited (OTC:TCEHY)’s platforms, the company has had approximately 125% growth in the last 5 years. Mohnish Pabrai, an Indian American business and investor, said that Tencent Holdings Limited (OTC:TCEHY) is one of the best Chinese stocks to buy.
On January 11, Daiwa analyst John Choi noted that China’s metaverse market is expected to reach $30 billion in 2025, with advertising revenue being the major contributor. Choi, in his research note to investors, mentioned Tencent Holdings Limited (OTC:TCEHY) as a leading force behind China’s metaverse, due to its “strong R&D and potential to launch immersive games in the metaverse.”
In the third quarter of 2021, 4 hedge funds were bullish on Tencent Holdings Limited (OTC:TCEHY), with stakes totaling $2.2 billion, as compared to 3 funds in the preceding quarter, holding stakes in Tencent Holdings Limited (OTC:TCEHY) worth $3.2 billion.
In addition to Bilibili Inc. (NASDAQ:BILI), Alibaba Group Holding Limited (NYSE:BABA), and JD.com, Inc. (NASDAQ:JD), Tencent Holdings Limited (OTC:TCEHY) is a notable Chinese name that is projected to rebound in 2022.
9. BYD Company Limited (OTC:BYDDF)
Number of Hedge Fund Holders: 2
BYD Company Limited (OTC:BYDDF) is a leading Chinese manufacturer of full-electric and hybrid cars, buses, trucks, battery-powered bicycles, solar panels, and rechargeable batteries. BYD Company Limited (OTC:BYDDF) is backed by billionaire Warren Buffett, who acquired 10% of the Chinese automaker back in 2008, and continues to stand by his position to date.
BYD Company Limited (OTC:BYDDF) is a fast-growing EV giant that is catching up rapidly with Tesla, Inc. (NASDAQ:TSLA), its American rival. Although China’s lockdown impacted BYD Company Limited (OTC:BYDDF)’s manufacturing capacity, operations returned to normal and the company sold 93,945 new vehicles in December, up 225.7% year-over-year. BYD Company Limited (OTC:BYDDF) surpassed Tesla’s sales volume in China, and its upcoming EV portfolio also seems promising.
BYD Company Limited (OTC:BYDDF) is positioned to grow in 2022, with plans including a couple of launches like its premium brand Denza in partnership with Daimler, expanding internationally, and publicly listing its semiconductor division. BYD Company Limited (OTC:BYDDF) expects its sales in 2022 to reach 1.2 million units, which represents roughly 25% market share in China’s EV market.
According to the Q3 database of Insider Monkey, 2 hedge funds reported owning stakes in BYD Company Limited (OTC:BYDDF) in the third quarter of 2021, equaling $22.3 million.
8. XPeng Inc. (NYSE:XPEV)
Number of Hedge Fund Holders: 25
Another stock impacted by Chinese regulations and limited subsidies for the growing EV market is XPeng Inc. (NYSE:XPEV), which is an electric vehicle manufacturer that is dually listed in the United States and Hong Kong.
XPeng Inc. (NYSE:XPEV) stock dropped 22% in the past 12 months, due to rising US interest rates, China’s limited support for the EV manufacturers in terms of subsidies, and the rising competition in the Chinese electric vehicle market.
Heading into 2022, Macquarie analyst Erica Chen on January 12 launched coverage of three U.S. listed Chinese electric vehicle makers, and XPeng Inc. (NYSE:XPEV) was one of them. The analyst, who kept an Outperform rating and a HK$221 price target on the stock, kept a buy call on XPeng Inc. (NYSE:XPEV).
XPeng Inc. (NYSE:XPEV) announced on January 1 that it delivered 16,000 Smart EVs in December 2021, despite ongoing global supply chain challenges. The December deliveries represented a 181% increase year-over-year, demonstrating XPeng Inc. (NYSE:XPEV)’s solid business momentum and execution capability.
In the third quarter of 2021, 25 hedge funds were long XPeng Inc. (NYSE:XPEV), with stakes totaling $657.1 million, which is an increase as compared to 19 funds holding stakes worth $784.6 million in XPeng Inc. (NYSE:XPEV) in the preceding quarter.
Catherine Wood, ARK Investment Management CEO, is bullish on XPeng Inc. (NYSE:XPEV) heading into 2022. In Q4 2021, she purchased 689,791 XPeng Inc. (NYSE:XPEV) shares, worth $34.7 million.
7. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders: 30
NIO Inc. (NYSE:NIO) is a Chinese automaker that specializes in designing and manufacturing electric vehicles. NIO Inc. (NYSE:NIO) distributes its vehicles in China, Germany, the United Kingdom, the United States, and Norway.
Although the shares fell about 55% in the last 12 months, 86 Research analyst Neal Du on January 13 upgraded NIO Inc. (NYSE:NIO) to Buy from Sell with a $52 price target. DNB Asset Management, a European asset manager, loaded up on volatile stocks and significantly raised its position in NIO Inc. (NYSE:NIO) as of January 16. DNB purchased 144,250 additional NIO Inc. (NYSE:NIO) shares, which increased its position to 833,746 shares.
In December, NIO Inc. (NYSE:NIO) delivered 10,489 vehicles, which is a 49.7% jump year-over-year. For Q4 2021, NIO Inc. (NYSE:NIO)’s deliveries totaled 25,034, which is a 44.3% increase year-over-year. HSBC analyst Yuqian Ding on January 19 also raised his price target on NIO Inc. (NYSE:NIO) from $43 to $54, giving it a Buy rating after the December delivery report and news of upcoming 2022 vehicles, as well as exchange rate movements.
According to the hedge funds tracked by Insider Monkey, 30 funds were bullish on NIO Inc. (NYSE:NIO), with stakes worth $1.1 billion. D E Shaw is one of the leading NIO Inc. (NYSE:NIO) stakeholders as of Q3 2021, with approximately 7 million shares amounting to $246.4 million.
6. NetEase, Inc. (NASDAQ:NTES)
Number of Hedge Fund Holders: 32
NetEase, Inc. (NASDAQ:NTES) is a Chinese internet company providing services related to social media content, community, communications, and commerce. The stock dropped 17% in the last 12 months, and Citi analyst Alicia Yap on November 17 lowered the price target on NetEase, Inc. (NASDAQ:NTES) to $136 from $142 but kept a Buy rating on the shares. According to the analyst, NetEase, Inc. (NASDAQ:NTES) will “remain as a defensive play in light of macro uncertainty impact to other internet verticals”.
According to reports, amid China’s tech crackdown, NetEase, Inc. (NASDAQ:NTES) slumped 7.46% to HK$150.2 on January 24 and remained the worst performer among blue chips, while the Hang Seng Tech Index also fell 2.8%.
However, the stock is projected to rebound in 2022, given that it is one of the major Chinese internet players, and Daiwa analyst John Choi noted on January 11 that a ban on the metaverse is unlikely in China, but the government is likely to take a more proactive approach to regulations and oversight. The analyst’s top picks for the success of the Chinese metaverse included NetEase, Inc. (NASDAQ:NTES), owing to its advertisement platforms, strong research and development capabilities, and its capacity to launch immersive metaverse video games. Moreover, the stock is considered a popular growth play, and double-digit revenue growth is forecasted for the years to come.
A total of 32 hedge funds monitored by Insider Monkey in the third quarter of 2021 were bullish on NetEase, Inc. (NASDAQ:NTES), down from 43 funds in the prior quarter. Orbis Investment Management held the largest stake in the company as of Q3 2021, owning 16.3 million shares worth $1.3 billion.
NetEase, Inc. (NASDAQ:NTES) is expected to turn its performance around in 2022, just like Chinese giants including Bilibili Inc. (NASDAQ:BILI), Alibaba Group Holding Limited (NYSE:BABA), and JD.com, Inc. (NASDAQ:JD).
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Disclosure: None. Analysts Think These 10 Chinese Stocks Could Rebound in 2022 is originally published on Insider Monkey.
