It would be easy to be scared of Chinese stocks right now, especially since the country was recently hit by massive flooding and the exact extent of the damage is perhaps best described as “unclear.” Now, Beijing is frantically trying to convince the world there are no problems, a move which is having limited effect as some Chinese stocks are up in Thursday afternoon’s trading session. But not all of them are.
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It’s good news for Alibaba (NASDAQ:BABA), which is up over 2% in Thursday afternoon’s session. It’s less good news for Baidu (NASDAQ:BIDU), which is only up fractionally. Meanwhile, for JD.com (NASDAQ:JD), it’s not that good of news as it’s down fractionally. That’s not the best of news overall, and things aren’t doing much better from a macroeconomic stance for China right now. China has a target of 5% growth in its gross domestic product, but with the year nearly two-thirds finished, doubt is already blooming for economists who don’t look for China to hit that target. And with the Cyberspace Administration of China trying to soothe foreign interests about still more data rules, it’s that much harder to meet.
But it gets worse. A Bloomberg report noted that the Chinese government recently went to certain investment funds in the country and…asked…them not to be “net sellers” of Chinese equities for a while. The word comes from people familiar with the matter who wished not to be identified, which really isn’t a surprise at all. Further, there are signs the homebuying struggles in China are still active as Country Garden missed a loan payment. This is one of the biggest misses since Evergrande Group, and it’s easy to wonder just how far this particular problem goes.
However, for the three Chinese stocks we’ve discussed today, all three still look sharp. Each is considered a Strong Buy by analyst consensus, though the one hit hardest today—JD.com—has the strongest upside potential. JD.com has a 75.23% upside potential on a price target of $60.91. Baidu, meanwhile, has the lightest upside potential, with 43.97% on its average price target of $188.17.
