When China eased its zero Covid policies, Chinese technology stocks staged an incredible rebound. Didi Global (DIDIY) and New Oriental Education (EDU) added 70% and nearly 25% for the month alone.
Smaller firms like iQiyi (IQ) and EV supplier XPeng (XPEV) rose by 80% and 60%, respectively. Which China technology stocks have more “pop” from here?
Investors willing to consider stocks in the country should look at JD.com (JD). JD is an internet retail firm that has a strong back-end supply chain. Similarly, Alibaba (BABA) has a mobile and desktop shopping destination for Chinese consumers. However, Alibaba’s founder, Jack Ma, is not involved with the company. The Chinese government will not forget Ma’s criticisms about the country's stifling growth.
BABA stock risks falling after its strong rally. Consider playing another rebound only after shares test recent lows.
In the gaming sector, Bilibili (BILI) gained 150% in a month (as of the end of last week). The electronic gaming firm has the most upside if China eases regulations in the sector. Netease (NTES) is also attractive.
In the third quarter, Netease posted revenue growing by 10.1% Y/Y. Net revenue could accelerate in 2023. That will happen if the government allows it to innovate on new games.
