Rotate From US Tech Sector To China's Alibaba, Baidu, JD; This Analyst Recommends Investors

Rotate From US Tech Sector To China's Alibaba, Baidu, JD; This Analyst Recommends Investors
  • The Politburo hosted a conference on economic development late last week, assessing current economic conditions and planning for 2H22. 
  • The Chinese government appears to be shifting its policy priority to the real estate industry, calling for stabilized pricing and unfinished projects to be delivered, Mizuho analyst James Lee noted. 
  • Lee believes these objectives would involve banks injecting liquidity into developers. 
  • He noted a favorable announcement for the Chinese internet industry, stating that the regulatory scrutiny for platform companies was over, and policies in the future should resume a regular course. 
  • Simultaneously, he noted that the government plans to announce a series of “greenlight” projects for investments.
  • Lee suspected that the greenlight projects were strategic to China’s technology growth, including semis, digital transformation for traditional industries, and autonomous driving. All of which supported his optimistic view of Baidu, Inc BIDU (Buy; Price Target: $285) as the market-share gainer in Cloud and leader in autonomous driving. 
  • Lee said that as the real estate market stabilized, it would improve consumer sentiment and spending, keeping him positive on e-commerce players like JD.com, Inc JD (Buy; Price Target: $90) and Alibaba Group Holding Limited BABA (Buy; Price Target: $160). 
  • He expected more stimulus policies before the next political meeting and recommended investors rotate from the U.S. to China Internet names due to the stimulus policies and a stable to positive revision cycle for FY23 estimates. 
  • Price Action: BABA shares traded lower by 0.56% at $88.89 on the last check Monday.
  • Photo by Henrix_photos via Pixabay

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