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5 Promising China Stocks to Buy on Solid Q1 GDP Growth
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China’s zero-Covid policy unquestionably dented consumers’ propensity to spend, while its property crisis destabilized growth in the world’s second-largest economy last year. However, China’s bold decision to abruptly abandon the policy helped its economy spring back to life in the first quarter of this year.
During the January to March period, China’s gross domestic product (GDP) grew by 4.5% year over year (YoY), better than the estimate of a growth of 3.8% YoY. It’s also much stronger than the previous quarter’s growth of 2.9% YoY.
Growth in retail sales and an uptick in consumption levels predominantly boosted China’s economy. People began to flock to shopping malls and eateries after the stringent Covid-restrictions were removed.
The National Bureau of Statistics noted that sales at China’s retailers witnessed an increase of 5.8% YoY in the first quarter to 11.49 trillion yuan, while retail sales, in reality, surged by 10.6% YoY in March itself. Consumption has started to recover from the beginning of this year, with retail sales increasing in both the urban and rural areas of China. Online retail sales, too, climbed 8.6% YoY in the first three months of this year.
The manufacturing side of the economy also showed considerable strength in the first quarter. Industrial output in China, which includes manufacturing, mining and utility sectors, increased by 3.9% in March compared to the same period last year. Concurrently, fixed-asset investments, or investments made by China in infrastructural and other projects to drive growth, jumped by 5.1% YoY in the first three months of 2023.
All in all, market pundits are now turning bullish on China’s economy, while the Chinese government itself expects the country’s economic growth to touch 5% by the end of this year, way more than last year’s 3% growth, which was mostly impacted by anti-virus controls, including lockdowns. China’s central bank, in the meantime, has vowed to provide ample liquidity to step up economic growth.
Thus, it’s prudent for investors to place their bets on fundamentally sound China stocks like NetEase (NTES - Free Report) , Vipshop (VIPS - Free Report) , Momo (MOMO - Free Report) , KE Holdings Inc. (BEKE - Free Report) , and Trip.com Group Limited (TCOM - Free Report) that are poised to make the most of the strength in the Chinese economy as indicated by impressive first-quarter GDP numbers. These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
NetEase is an Internet technology company engaged in the development of applications, services, and other technologies for the Internet in China. NTES has a Zacks Rank #2.
The Zacks Consensus Estimate for its current-year earnings has moved up 6.6% over the past 60 days. The company’s expected earnings growth rate for the current year is nearly 6%.
Vipshop is an online discount retailer for brands. The company offers branded products to consumers in China through flash sales on its vipshop.com website. VIPS sports a Zacks Rank #1.
The Zacks Consensus Estimate for its current-year earnings has moved up 9.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 6.5%.
Momo provides mobile social and entertainment platforms primarily in China. MOMO has a Zacks Rank #1.
The Zacks Consensus Estimate for its current-year earnings has moved up 36.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 18.8%.
KE Holdings is a real estate company. It provides a platform for housing transactions and services, based in China. BEKE has a Zacks Rank #2.
The Zacks Consensus Estimate for its current-year earnings has moved up 18.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 126.5%.
Trip.com Group is a one-stop travel service company, based in Shanghai, the People’s Republic of China. TCOM has a Zacks Rank #1.
The Zacks Consensus Estimate for its current-year earnings has moved up 12.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 275.9%.
NetEase, Vipshop, Momo, KE Holdings, and Trip.com Group’s estimated earnings growth rates for the next year are 10.7%, 5.5%, 10.8%, 39%, and 67.9%, respectively.
Shares of NetEase, Vipshop, Momo, KE Holdings, and Trip.com Group have already gained 6.4%, 115.4%, 99.1%, 52.9%, and 72.3%, respectively, over the past year.
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5 Promising China Stocks to Buy on Solid Q1 GDP Growth
China’s zero-Covid policy unquestionably dented consumers’ propensity to spend, while its property crisis destabilized growth in the world’s second-largest economy last year. However, China’s bold decision to abruptly abandon the policy helped its economy spring back to life in the first quarter of this year.
During the January to March period, China’s gross domestic product (GDP) grew by 4.5% year over year (YoY), better than the estimate of a growth of 3.8% YoY. It’s also much stronger than the previous quarter’s growth of 2.9% YoY.
Growth in retail sales and an uptick in consumption levels predominantly boosted China’s economy. People began to flock to shopping malls and eateries after the stringent Covid-restrictions were removed.
The National Bureau of Statistics noted that sales at China’s retailers witnessed an increase of 5.8% YoY in the first quarter to 11.49 trillion yuan, while retail sales, in reality, surged by 10.6% YoY in March itself. Consumption has started to recover from the beginning of this year, with retail sales increasing in both the urban and rural areas of China. Online retail sales, too, climbed 8.6% YoY in the first three months of this year.
The manufacturing side of the economy also showed considerable strength in the first quarter. Industrial output in China, which includes manufacturing, mining and utility sectors, increased by 3.9% in March compared to the same period last year. Concurrently, fixed-asset investments, or investments made by China in infrastructural and other projects to drive growth, jumped by 5.1% YoY in the first three months of 2023.
All in all, market pundits are now turning bullish on China’s economy, while the Chinese government itself expects the country’s economic growth to touch 5% by the end of this year, way more than last year’s 3% growth, which was mostly impacted by anti-virus controls, including lockdowns. China’s central bank, in the meantime, has vowed to provide ample liquidity to step up economic growth.
Thus, it’s prudent for investors to place their bets on fundamentally sound China stocks like NetEase (NTES - Free Report) , Vipshop (VIPS - Free Report) , Momo (MOMO - Free Report) , KE Holdings Inc. (BEKE - Free Report) , and Trip.com Group Limited (TCOM - Free Report) that are poised to make the most of the strength in the Chinese economy as indicated by impressive first-quarter GDP numbers. These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
NetEase is an Internet technology company engaged in the development of applications, services, and other technologies for the Internet in China. NTES has a Zacks Rank #2.
The Zacks Consensus Estimate for its current-year earnings has moved up 6.6% over the past 60 days. The company’s expected earnings growth rate for the current year is nearly 6%.
Vipshop is an online discount retailer for brands. The company offers branded products to consumers in China through flash sales on its vipshop.com website. VIPS sports a Zacks Rank #1.
The Zacks Consensus Estimate for its current-year earnings has moved up 9.3% over the past 60 days. The company’s expected earnings growth rate for the current year is 6.5%.
Momo provides mobile social and entertainment platforms primarily in China. MOMO has a Zacks Rank #1.
The Zacks Consensus Estimate for its current-year earnings has moved up 36.2% over the past 60 days. The company’s expected earnings growth rate for the current year is 18.8%.
KE Holdings is a real estate company. It provides a platform for housing transactions and services, based in China. BEKE has a Zacks Rank #2.
The Zacks Consensus Estimate for its current-year earnings has moved up 18.5% over the past 60 days. The company’s expected earnings growth rate for the current year is 126.5%.
Trip.com Group is a one-stop travel service company, based in Shanghai, the People’s Republic of China. TCOM has a Zacks Rank #1.
The Zacks Consensus Estimate for its current-year earnings has moved up 12.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 275.9%.
NetEase, Vipshop, Momo, KE Holdings, and Trip.com Group’s estimated earnings growth rates for the next year are 10.7%, 5.5%, 10.8%, 39%, and 67.9%, respectively.
Shares of NetEase, Vipshop, Momo, KE Holdings, and Trip.com Group have already gained 6.4%, 115.4%, 99.1%, 52.9%, and 72.3%, respectively, over the past year.
Image Source: Zacks Investment Research