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Shares of some of the country's biggest companies clawed back some of Thursday's losses and Hang Seng index closed 2.8% higher Friday.
Chinese stocks are up 30% in the last five days (they're now historically overvalued). Investors seeking hyper growth (15%-plus growth for the next five-plus years) don't have to take on speculative risk buying Chinese ADRs. Here are 10 Super Sleep Well At Night quality blue chips that are 27% historically undervalued and have strong upside potential in the next year.
Hong Kong's Hang Seng index ended the Thursday trading session 1.5% lower.
Fund managers are reallocating funds from other Asian markets to Chinese stocks, expecting them to be the "winners" of the year. This shift is supported by a series of favorable policies from China, leading to significant gains in the A-share market, which have caught the attention of global investors.
Chinese stocks surged, with the Nasdaq Golden Dragon China Index (HXC) closing up by 4.93%. Major gainers included Taiwan Semiconductor Manufacturing Company (TSM), which rose by 2.17%, Alibaba (BABA, Financial) by 2.23%, Pinduoduo (PDD) by 4.85%, and JD.com (JD) by 4.36%.
I highlighted iShares China Large-Cap ETF as a contrarian investment on June 20, 2024, citing Charlie Munger's belief in Chinese stocks' long-term value despite bearish trends. China's late September stimulus, including interest rate cuts and liquidity injections, spurred a sharp rally in the FXI ETF, reaching a new 2024 high. FXI remains attractive with a low P/E ratio compared to U.S. ETFs, but geopolitical risks with the U.S. and Taiwan persist.
Chinese stocks have entered a new bull market, driven by significant policy measures and momentum, but long-term investment risks remain high. Despite recent rallies, deteriorating fundamentals and extreme political risks make Chinese stocks a speculative and risky investment. Historical performance shows Chinese stocks underperforming significantly compared to US stocks, even with strong GDP growth.
Since late August, there has been no shortage of positive developments for the Chinese technology and e-commerce giant Alibaba (NYSE: BABA).
Here is how Alibaba (BABA) and Texas Roadhouse (TXRH) have performed compared to their sector so far this year.
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