In this piece, we will take a look at the ten Chinese stocks that billionaires are crazy about. If you want to skip our overview of China's economic struggles, then you can skip ahead to 5 Chinese Stocks Billionaires Are Crazy About.
As 2023 heads to close, one thing is for certain: the world is vastly different from what it was before the coronavirus pandemic disrupted global life, markets, and economies in 2020. China, where the coronavirus first surfaced, is also a changed country. Before the pandemic, Chinese economic growth was anything that anyone could talk about. However, since then, the Asian economic giant has struggled to recover, particularly since it valiantly tried to stamp out the virus by enforcing zero COVID lock downs. At the same time, China's real estate sector is one of the biggest worries for any global analyst, investor, or economist as financial insolvency for the nation's largest property developers carries the risk of contagion spreading to the Western world.
Looking at the Chinese economy, there are concerns that it might be unable to resume its growth trajectory anytime soon. For instance, the country's consumer price index (CPI) dropped by 0.5% in November for the fastest pace of decline in three years. While for ordinary people falling prices are nothing but great news, for economists it is worrying. This is because if prices fall, then producers and manufacturers do not have an incentive to expand their production. The lack of incentive leads to a slowdown in economic growth, and ironically, not only can it lead to higher prices due to short supply but also complete shuttering down of industries. The deflation was also present in China's producer price index (PPI) which fell by 3% annually in November, accelerating its 2.6% drop in October to further create worries of an industrial slowdown. Chinese leaders are eager for growth to return, and while they were provided some respite by November exports data, the long-term picture is still unclear.
Chinese exports in U.S. dollar terms grew by 0.5% annually in November beating analyst and economist estimates. However, Chief Asia Economist Frederic Neumann warned against reading too much into this growth, as he shared in a talk with CNBC that the growth could very well reflect inventory adjustment. According to him:
All the forward-looking indicators — new orders for electronics, for example, new export orders — they all suggest that there is not a pick-up in demand and in fact, it’s more likely the U.S. economy will slow into next year, European demand looks still wobbly and so does the rest of EM [emerging markets], so where is that demand going to come from for a sustained export cycle? That’s really a bit of a headache then for Asian policymakers including in mainland China, because they need to rely on domestic demand to really get the engine going again, and for that we haven’t seen evidence of that happening just yet.
Chinese Premier Xi Jinping, one of the most powerful leaders in the world, is also aware of these challenges. President Xi, who visited the United States recently, spoke at an event in Beijing in early December where he shared that he was aware that the economy is in a "critical" stage, and stressed the need to "strengthen economic propaganda." China's economic woes have been right at the center of global media attention, particularly due to high levels of youth unemployment and risks in the property sector.
Chinese property behemoth Evergrande is not so grand these days. The firm is currently facing bankruptcy proceedings in a Hong Kong court which might lead the developer to liquidate its assets and pay back debtors. However, the court might also allow the firm to restructure its operations since a liquidation could create far reaching implications for the Chinese economy and the real estate industry. The property sector's woes aren't limited to Evergrande. Another major Chinese property developer, Country Garden, is also teetering on the edge of default. The firm reported a massive $6.7 billion loss in August - its highest in history - and the Chinese government placed it on a list of developers that are eligible for federal support in November 2023. This government fiscal support is also a key factor that analysts are focused on since it is one of Beijing's biggest tools to revive its struggling economy.
So, as clouds continue to circle China, we decided to look at which Chinese stocks billionaires are buying with some notable picks being JD.com, Inc. (NASDAQ:JD), PDD Holdings Inc. (NASDAQ:PDD), and Alibaba Group Holding Limited (NYSE:BABA).
To compile our list of the Chinese stocks that billionaires are buying, we first made a list of the 40 biggest Mainland Chinese companies that trade on U.S. exchanges. Then, those with the greatest number of billionaire investors were picked.
Vipshop Holdings Limited (NYSE:VIPS) is an internet retail company headquartered in Guangzhou, China. Despite turbulence in the Chinese economy, the firm has held its ground on the financial front and it has beaten analyst EPS estimates in all four of its latest quarters. To boot, analysts have rated the shares as Strong Buy on average and set an average share price target of $18.90.
By the end of this year's third quarter, 30 out of the 910 hedge funds part of Insider Monkey's database had held a stake in Vipshop Holdings Limited (NYSE:VIPS). Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital was the firm's biggest shareholder as it owned 7.7 million shares that were worth $124 million.
Vipshop Holdings Limited (NYSE:VIPS) joins PDD Holdings Inc. (NASDAQ:PDD), JD.com, Inc. (NASDAQ:JD), and Alibaba Group Holding Limited (NYSE:BABA) in our list of the top Chinese stocks that billionaires are piling into.
9. New Oriental Education & Technology Group Inc. (NYSE:EDU)
Number of Billionaire Investors In Q3 2023: 10
New Oriental Education & Technology Group Inc. (NYSE:EDU), as the name suggests, is an education company. It enables customers to prepare for language and college admissions tests for universities all over the world. New Oriental Education & Technology Group Inc. (NYSE:EDU) is also a case study in corporate resilience since while its shares dropped by 88% in 2021 after China's private education ban, the stock is up by 132% year to date but still significantly below 2021 peak levels.
During Q3 2023, 34 out of the 910 hedge funds surveyed by Insider Monkey had bought the firm's shares. New Oriental Education & Technology Group Inc. (NYSE:EDU)'s largest hedge fund investor in our database is Panayotis Takis Sparaggis's Alkeon Capital Management as it owns a $232 million stake.
Trip.com Group Limited (NASDAQ:TCOM) is a Chinese travel services company that enables travelers to plan their trips and accommodation providers to secure a steady stream of guests. November 2023 was a great month for the firm, as its management shared optimism about traffic growth after China's government expanded its visa free entry program to more countries.
Insider Monkey dug through 910 hedge funds for their September quarter of 2023 shareholdings and found 42 Trip.com Group Limited (NASDAQ:TCOM) investors. Gregard Heje's Kontiki Capital was the firm's biggest stakeholder among these as it held $160 million worth of shares.
Baidu, Inc. (NASDAQ:BIDU) is one of China's largest internet companies. It is a diversified online platform that provides search engines, healthcare access, marketing, social media, and other associated products and services. Like other Chinese tech companies, the shares are rated Strong Buy on average and analysts have set an average share price target of $171.74.
For their third quarter of 2023 shareholdings, 44 out of the 910 hedge funds profiled by Insider Monkey had bought a stake in the company. Baidu, Inc. (NASDAQ:BIDU)'s largest hedge fund investor is Panayotis Takis Sparaggis's Alkeon Capital Management courtesy of its $331 million investment.
H World Group Limited (NASDAQ:HTHT) is a Chinese hospitality company headquartered in Shanghai, China. The firm's third quarter financial results saw it report a 53.6% annual revenue growth that beat previous guidance.
28 out of the 910 hedge funds surveyed by Insider Monkey during Q3 2023 had invested in H World Group Limited (NASDAQ:HTHT). Along with JD.com, Inc. (NASDAQ:JD), PDD Holdings Inc. (NASDAQ:PDD), and Alibaba Group Holding Limited (NYSE:BABA), it is a top Chinese stock for billionaires.
