Bernstein: These Chinese internet stocks are top picks – Alibaba not among them

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China’s internet stocks have rebounded since Mar
Partial advance into the profit zone
Bernstein names stock favorites

Many Chinese internet titles have been on the up again in the last three months. For some stocks, the rally was so strong that they were able to make up for the losses at the start of the year and are now able to look forward to a positive stock market balance for 2022. These include Pinduoduo, up 11.18 percent year-to-date, and Kuaishou, up 21.3 percent since January. However, other stocks such as the e-commerce giant Alibaba and its competitor JD.com are not on green territory (as of the closing prices on July 1, 2022).

Bernstein favors these stocks

Despite the recent rally, not all stocks have made Bernstein’s recommended list. “Our top picks in this sector remain JD, Meituan, Pinduoduo and Kuaishou,” Bernstein analyst Robin Zhu and his team said in a report quoted by CNBC. “Interest in Alibaba continues, mainly from foreign investors, while feedback on Tencent has become very negative,” the expert continued.

Zhu believes that stocks whose businesses focus on “real” categories such as e-commerce, food delivery and local services are preferable to stocks in “virtual” categories such as games, media and entertainment.

Alibaba with increasing competition

Former investor darling Alibaba, meanwhile, is struggling with increasing competition in its segment. According to a Bernstein analysis, Alibaba’s market share fell by 6 percent in the first quarter in favor of JD, Pinduoduo and Kuaishou, which in turn increased their market share. According to CNBC, Douyin’s gross merchandise volume increased by 38 percent during this period – even though the company only has a 12 percent market share among the five largest Chinese platforms.

Kuaishou has also become a serious Alibaba competitor: “Your recent decision to open external links [Alibabas] Capping Taobao and JD shows times have changed,” Ashley Dudarenok, founder of Chinese marketing consultancy ChoZan, said.

Also JPMorgan per China stocks

A team of analysts from JPMorgan is also taking a closer look at Chinese stocks and considers the Chinese market to be superior to other investment regions, especially in the second half of the year. A House of Wall Street report said the case for China stocks is more compelling relative to emerging Asia and global stocks.

In the “China Internet Comeback” section, JPMorgan holds JD.com, Kuaishou, Meituan, Pinduoduo and Tencent, among others. Contrary to Bernstein’s assessment, Alibaba also makes it onto the recommendation list. The analysts are counting on a rebound here.

Editorial office finanzen.net

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