Investor Jason Hsu said shares of Chinese e-commerce giants look attractive as Beijing tries to stimulate domestic consumption. Hsu, founder and chairman of Rayliant Global Advisors, said on CNBC’s Pro Talks program that Alibaba, JD.com and Pinduoduo are his top choices. He also revealed that he takes a more cautious stance on Baidu regarding company-specific factors. The Chinese government is expected to announce details of much-anticipated fiscal stimulus measures in the first week of November to boost growth amid a slowing economy. Alibaba (BABA) and JD.com “With such pessimistic expectations for consumer growth, Alibaba and JD.com may be too cheap, and investors see opportunities as Beijing’s economic situation improves,” Hsu told CNBC’s Tanvir Gill on Wednesday express. “This is the catalyst for the return.” In the first three quarters of this year, China’s economy grew by 4.8% annually, slightly lower than the 5% comprehensive growth rate in the first half of the year. Beijing aims for economic growth of around 5% in 2024. If there are signs of consumer growth returning in China, he said the stock could climb to $200 a share, or double its current level. Alibaba’s New York-listed shares have risen 30% this year, and Wall Street analysts predict they will rise another 17% in the next 12 months. Alibaba 1Y line Hsu said that he has similar views on JD.com and Alibaba, and his preference for the two is mainly driven by valuation indicators. “Overweighting one over the other is purely based on where they are currently trading, in terms of valuation ratios, and Alibaba is cheaper, so we prefer it,” he added. Xu manages a portfolio of ETFs, including the Rayliant Quantamental China Equity ETF , the ETF aims to “exploit mispricing in Chinese stocks traded in global markets.” Pinduoduo has underperformed the broader Chinese stock market this year, down 14% year to date. However, the e-commerce giant that owns the Temu platform has actually been gaining market share through aggressive marketing and discounting. In August, the stock fell more than 30% in a single day after revealing that earnings per share, operating income and profit margins exceeded expectations, but revenue fell short of expectations. Xu said the platform has been successful in attracting budget-conscious consumers during China’s recent economic slowdown. “They’ve been gaining market share because the way they buy is different and the prices are much cheaper,” he added. Baidu Not all Chinese tech stocks are equally attractive. The founder of Rayliant has criticized tech giant Baidu, saying the company’s efforts to diversify beyond online search have not made the progress expected. “Our main concern with Baidu is that as an online search engine, it is a one-trick pony,” he said after the company’s shares fell more than 23% this year. “It certainly doesn’t have the diversified capabilities attractiveness of a company like Google.” While Baidu has tried to expand into artificial intelligence and electric vehicle technology, those moves have yet to generate significant profit streams. “It’s working very hard with anyone who wants to leverage Baidu’s AI capabilities, but not many of them are really successful (and) translated into actual profit streams,” Xu added. “We think the AI ​​story may have been Ended on Baidu, it will become a one-trick pony again.” — CNBC’s Evelyn Cheng contributed reporting.
Fund managers are bullish on three Chinese tech stocks | Real Time Headlines
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