In March, the Chinese Communist Party changed its tone against domestic technology firms. It said it
would loosen regulations to stimulate growth. Since then, Alibaba (BABA) stock bottomed at $73.28.
JD.com (JD) is on an uptrend. Even Pinduoduo (PDD) and Bilibili (BILI) stopped falling.
Among the Chinese stocks, Alibaba has the most attractive valuation. Investors seeking a deal may still
consider BABA stock from here. The market priced in its poor growth in the single-digit percentage for
the year. As long as the CCP does not issue a penalty or an arbitrary regulation against Alibaba, the stock
will rebound.
At the macroeconomic level, China's slowdown will reverse. The country locked down Shanghai
unnecessarily. Covid diagnostics firms made billions during the over two-month lockdown. With the
lifting, China will rebuild its economy.
Risks
Bankruptcy in real estate is at a standstill. The stock exchange halted trading of Evergrande stock
months ago. In addition, Evergrande will have another year to deal with its loan default. The
government may finally step in to loosen credit conditions. Its rules are the reason for the real estate
crash.
Your Takeaway
Chinese internet firms may post growth this quarter. The downside risks in BABA, JD, BILI, and PDD stock
are potentially over.
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