Three Chinese stocks analysts are watching for long-term opportunities | Wilnesh News
Chinese stocks ended a big week, marked by a $1.4 trillion debt swap plan that failed to meet calls from many investors for more direct support from the government. For many, investor reaction has only reinforced the need to look for long-term opportunities in unchanged stocks. The Finance Ministry said at a closely watched news conference on Friday that more fiscal support is likely next year, with the near-term focus on resolving local government debt problems. The relatively modest measures come as China prepares to strengthen trade ties with the United States under President-elect Trump, who has threatened to impose steep tariffs on imported goods. So far, Shanghai’s CSI 300 Index has risen nearly 6.6% last week, and Hong Kong’s Hang Seng Index has risen 3.2%. Preventing further weakness Ren Liqian, director of quantitative investment at WisdomTree, said that at the macroeconomic level, China is working hard to ensure that inflation and employment do not worsen further. While Ren doesn’t expect a return to rapid growth, she is watching how Chinese companies are able to build their own brands and charge premium prices, maturing from a previous model of competing solely on price. “So I think a consumer goods company like Anta, which I don’t think many people understand outside of China, is really becoming the world’s leading sportswear company,” Ren said. “I think they’ll be doing it globally soon as well. But not many Americans know the brand.” But if Anta continues on its current path, maybe in 10 years consumers will view the company as “Adidas or something.” So-called foreign sports brands,” Ren Zhengfei said. “This is something I’m personally concerned about.” Anta, a Hong Kong-listed company that sells sportswear under its own brands, also owns Fila and high-end brands Descente. The company said in October that Anta brand retail sales in the third quarter grew by mid-single digits compared with the same period last year, while Fila weakened and other brands grew by as much as 50%. Anta shares have risen 18% so far in 2024. Baidu is reportedly set to release its own artificial intelligence-connected glasses on Tuesday to compete with Meta’s RayBans product. Xpeng Motors Expands Electric Vehicle Startup Xpeng Motors last week announced the launch of its own humanoid robot, as well as a new $26,000 car called the P7+, which has received more than 30,000 pre-orders and will be launched this month Start delivering. These products will essentially only be sold in China, at least initially. “For Chinese electric vehicles, the door has been closed and reshoring is impractical,” Macquarie analysts said in a Nov. 7 report. “Our top choice is Xpeng Motors, a pure Chinese “Xpeng Motors has not set foot in the U.S. market and currently has no plans to enter the market.” “Driven by new competitive models such as the M03 and P7+, there is still room for rapid growth in domestic sales of the M03. The successful listing of the company will help ease investors’ concerns about supply chain management and product competitiveness. “Upcoming catalysts such as the launch of pure vision ADAS M03 and hybrid powertrain vehicles may benefit domestically,” Macquarie analysts said. Confidence/consumption recovers and is not affected by geopolitical events. “About half of the more than 20,000 vehicles Xpeng has delivered each month in the past two months have been from its lower-priced Mona M03 car. In the consumer sector, Macquarie’s top choice is Yum China, which operates Pizza Hut and KFC in China. “Yum Brands is our top concept in the consumer space because it is purely domestic,” the analysts said. “The company’s strategic shift toward franchised and new store formats K COFFEE and Pizza Hut WoW will be long-term growth drivers that can Get rid of geopolitical risks.” Yum China has raised its shareholder return target to $4.5 billion in 2026 from $3 billion in 2024, they added. Yum China announced its third-quarter financial results on November 4, with operating profit increasing 15% year-on-year to US$371 million. Xpeng Motors will release quarterly results on November 19. The central government is scheduled to release October retail sales and industrial data on Friday, November 15. “You have to be very willing to tolerate negative sentiment to invest in China,” Ren Zhengfei said. “Long periods of negative emotions often occur, which really test one’s adventurous spirit.” But she also emphasized that Chinese stocks can serve as a hedge against other stock markets. —CNBC’s Michael Bloom contributed to this report.
