We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Bull Market in China: Why Investors Should Take Notice
There’s Always a Bull Market Somewhere
Savvy investors understand the power of an open mind when analyzing the investing environment. Because markets are inherently cyclical, active investors should track various markets and stocks on their watchlists to uncover the strongest trends. For instance, the U.S. equity market is currently in a corrective phase. Since roughly 75% of a stock’s move is correlated to the general market’s direction it trades in, investors should look for strong trends outside of the U.S. so that they are not fighting an uphill battle.
Chinese Stocks Exhibit Stellar Relative Strength
There’s no cleaner and simpler way to determine a robust trend than to monitor relative price strength. Year-to-date, the iShares China Large-Cap ETF ((FXI - Free Report) ) is up more than 20%. While the performance is impressive in a vacuum, it’s even more remarkable considering that the S&P 500 Index is slightly negative for the year.
Chinese Stocks are Resilient Despite Trump Tariffs
Chinese stocks are surprisingly resilient despite increasingly heated rhetoric between the U.S. and China and a back-and-forth tariff trade war.
Below are 3 bullish catalysts for Chinese stocks:
1. Increased Fiscal Stimulus: Liquidity is the critical catalyst for any market. Since last year, the Chinese government has pumped money into its economy, and Wednesday is evidence that the rate at which they are doing so is only increasing. Today, China Premier Li Qiang announced further fiscal stimulus and set China’s growth target at a juicy 5%.
2. A Return of EPS Growth: E-commerce giant Alibaba ((BABA - Free Report) ) is a solid example of how China’s tech earnings have turned the corner. After growing steadily for five years, BABA’s growth stagnated from the end of 2020 to early 2023. However, the China bellwether has started to grow again, and Zacks Consensus Analyst Estimates predict record EPS growth in 2025 and 2026.
Image Source: Zacks Investment Research
While BABA is one of the best proxies for Chinese EPS growth, investors will likely get more evidence of a China turnaround when Futu Holdings ((FUTU - Free Report) ) and JD.com ((JD - Free Report) ) report earnings in the next few days.
3. Potential Tariff Resolution: To understand what will happen next in the China-US trade war, investors must understand how President Donald Trump conducts business. While most investors believe the immediate impact of tariffs is negative for both countries, second-order thinking suggests that Trump is likely using tariffs as nothing more than a negotiating tool. Before COVID-19, the U.S. and China reached a deal despite heated rhetoric beforehand during Trump’s first presidency. With Chinese stocks already acting well in the face of tariffs, any resolution to the trade war would likely send them flying higher.
Chinese Tech Stocks Set Up in Big Base Structure
The Invesco China Technology ETF ((CQQQ - Free Report) ) is currently set up in a long, four-month base structure. As the Wall Street adage goes, “The longer the base, the higher in space.”
Image Source: Zacks Investment Research
Beyond the many positives mentioned, valuations are at rock-bottom levels, and short-interest recently notched an all-time high (despite the recent uptrend). Should the breakout stick, these factors add even more fuel to the fire, potentially setting the stage for a vertical price move.
Bottom Line
The confluence of robust government stimulus, a resurgence in corporate earnings, and the potential for eased trade tensions present a compelling case for Chinese equities.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Bull Market in China: Why Investors Should Take Notice
There’s Always a Bull Market Somewhere
Savvy investors understand the power of an open mind when analyzing the investing environment. Because markets are inherently cyclical, active investors should track various markets and stocks on their watchlists to uncover the strongest trends. For instance, the U.S. equity market is currently in a corrective phase. Since roughly 75% of a stock’s move is correlated to the general market’s direction it trades in, investors should look for strong trends outside of the U.S. so that they are not fighting an uphill battle.
Chinese Stocks Exhibit Stellar Relative Strength
There’s no cleaner and simpler way to determine a robust trend than to monitor relative price strength. Year-to-date, the iShares China Large-Cap ETF ((FXI - Free Report) ) is up more than 20%. While the performance is impressive in a vacuum, it’s even more remarkable considering that the S&P 500 Index is slightly negative for the year.
Chinese Stocks are Resilient Despite Trump Tariffs
Chinese stocks are surprisingly resilient despite increasingly heated rhetoric between the U.S. and China and a back-and-forth tariff trade war.
Below are 3 bullish catalysts for Chinese stocks:
1. Increased Fiscal Stimulus: Liquidity is the critical catalyst for any market. Since last year, the Chinese government has pumped money into its economy, and Wednesday is evidence that the rate at which they are doing so is only increasing. Today, China Premier Li Qiang announced further fiscal stimulus and set China’s growth target at a juicy 5%.
2. A Return of EPS Growth: E-commerce giant Alibaba ((BABA - Free Report) ) is a solid example of how China’s tech earnings have turned the corner. After growing steadily for five years, BABA’s growth stagnated from the end of 2020 to early 2023. However, the China bellwether has started to grow again, and Zacks Consensus Analyst Estimates predict record EPS growth in 2025 and 2026.
Image Source: Zacks Investment Research
While BABA is one of the best proxies for Chinese EPS growth, investors will likely get more evidence of a China turnaround when Futu Holdings ((FUTU - Free Report) ) and JD.com ((JD - Free Report) ) report earnings in the next few days.
3. Potential Tariff Resolution: To understand what will happen next in the China-US trade war, investors must understand how President Donald Trump conducts business. While most investors believe the immediate impact of tariffs is negative for both countries, second-order thinking suggests that Trump is likely using tariffs as nothing more than a negotiating tool. Before COVID-19, the U.S. and China reached a deal despite heated rhetoric beforehand during Trump’s first presidency. With Chinese stocks already acting well in the face of tariffs, any resolution to the trade war would likely send them flying higher.
Chinese Tech Stocks Set Up in Big Base Structure
The Invesco China Technology ETF ((CQQQ - Free Report) ) is currently set up in a long, four-month base structure. As the Wall Street adage goes, “The longer the base, the higher in space.”
Image Source: Zacks Investment Research
Beyond the many positives mentioned, valuations are at rock-bottom levels, and short-interest recently notched an all-time high (despite the recent uptrend). Should the breakout stick, these factors add even more fuel to the fire, potentially setting the stage for a vertical price move.
Bottom Line
The confluence of robust government stimulus, a resurgence in corporate earnings, and the potential for eased trade tensions present a compelling case for Chinese equities.