Best Chinese Stocks to Watch in 2024
Investing in Chinese stocks can be difficult, not only because the Chinese government imposes several restrictions on foreign investors. However, foreign investors can invest in China stocks using American Depositary Receipts (ADRs).
This article focuses on a few Chinese stocks to watch this year and the pros and cons of investing in them.
Table of Contents
Key Takeaways
- China stocks are stocks belonging to companies which are headquartered in China. The Chinese stock market is valued at around $12 trillion and is expected to grow in the coming decades.
- Many Chinese companies are protected from competition by Western counterparts when operating in China.
- Investing in China stocks can be difficult due to restrictions imposed on foreign investors. Foreign investors can use American Depositary Receipts (ADRs) which are certificates issued by a U.S. bank that represent shares in a foreign stock.
What are Chinese Stocks?
Chinese stocks are stocks of companies that are headquartered in China. What makes the Chinese stock market relevant for many foreign investors is its sheer size. China has a population of more than 1.4 billion people, a growing portion of which is becoming middle class and finding its way into more disposable income.
Some Chinese companies rank among the largest in the world. As an example, Alibaba, which appears on this list of China stocks, reached a market capitalization of over $500 billion in 2018, becoming the second-ever Asian company to do so. The Alibaba brand is considered the ninth most valuable brand in the world.
Something to keep in mind for foreign investors looking to invest in China stocks is that the Chinese government has imposed several restrictions on foreign investment within the country. However, with the use of American Depositary Receipts (ADRs) foreign investors outside of China can invest in Chinese stocks. ADRs are certificates that represent shares in China stocks which are issued by international banks and can be bought and sold on the Western stock exchanges in the US, UK and Europe.
Best Chinese Stocks to Watch
It is important to note that whatever constitutes the ‘best’ investment for a given investor’s portfolio is a subjective matter. Personal financial goals and situations can lead to different answers to the same questions. Therefore, this list of China stocks is best used as a starting point for the research on which an investor builds their investment portfolio.
Here is the list of the best China stocks to watch:
- Baidu (BIDU) - Chinese variant of Google with a search engine in China offering digital services
- Alibaba (BABA) - Chinese version of Amazon, expanding into AI and cloud computing
- JD.com (JD) - An e-commerce competitor of Alibaba
- Weibo (WB) - Comparable to Twitter, owned by Sina Corporation
- NIO (NIO) - Chinese electric vehicle maker
Baidu (BIDU)
Baidu can be thought of as China’s Google. The company offers similar products like a search engine and Baidu Maps but also has products like Baidu Wangpan (a cloud storage service) and Baidu Baike (an online encyclopaedia).
Around three-quarters of all online searches in China are completed using Baidu’s search engine. It faces no competition from the likes of Google or Microsoft’s Bing, due to strict censorship laws imposed by the Chinese government.
Baidu was founded in the year 2000 by Robin Li and Eric Xu. Baidu's search engine originates in RankDex, a piece of technology developed by Robin Li in 1996. The company has a market capitalisation of around $48 billion.
Alibaba (BABA)
Founded in 1999 by Jack Ma, Alibaba’s business activities show similarities to e-commerce giant Amazon. Alibaba owns and operates several marketplaces where users can sell and buy goods, namely Alibaba.com (which is business-to-business), Taobao (which is customer-to-customer), and Tmall (which is business-to-customer).
The company also has an artificial intelligence branch and is trying to expand into the media industry. Alibaba has a market capitalisation of around $224 billion. The total revenue generated by all of the company’s operations was around $134 billion in 2022.
JD.com (JD)
JD.com is one of Alibaba’s largest competitors, offering a substantially large business-to-customer online retailing platform. The company was founded by Liu Qiangdong in 1998. The company has changed its name twice. Until 2007 it operated under the name Joybuy, then switching to 360buy.com from 2007 onwards, before finally settling on JD.com in 2013.
Tencent, a Chinese multinational technology and entertainment conglomerate and holding company, owns a 20% stake in JD.com. JD.com has a market capitalisation of around $50 billion and generated a revenue of around $150 billion in 2022.
JD.com is investing heavily in high-tech delivery using drones and AI systems. It operates a large drone fleet with which it is actively experimenting with the goal of establishing an autonomous delivery system which delivers products directly from warehouses to customers.
Weibo (WB)
‘Weibo’ is the Chinese word for ‘microblog’, which is exactly the type of platform Weibo is. Launched in 2009 by its parent company Sina Corporation, the platform bears many similarities to Twitter, as users can post short texts with a limited number of characters, as well as pictures and videos.
Weibo has over 500 million monthly active users, the lion’s share of which are Chinese nationals. The company went public on the NASDAQ in 2000 but has plans to go private, citing the political tensions between the US and China.
Weibo has a market capitalisation of around $3 billion and is owned by Sina Corporation, a Chinese technology company that also operates Sina Mobile, Sina Online, and Sinanet. Sina Weibo, often referred to as just ‘Weibo’, has captured more than 50% of the daily microblogging content generation within China.
NIO (NIO)
Nio Incorporated is a Chinese multinational automobile manufacturer. The company’s vehicle range and future vehicles are fully electric, and Nio uniquely developed a battery-swapping system to work as an alternative to conventional charging stations. The company launched its brand in 2016 and raised billions in funding in several investment rounds. Multinational conglomerate Tencent also acquired a stake.
The company has a market capitalisation of around $18 billion and produced a revenue of around $7 billion in 2022. The company long took criticism for attracting billions of dollars in investment but failing to deliver substantial numbers of its EVs to market. In recent years, however, Nio has posted healthy growth and sales numbers. On the 12th of December 2022, the company officially rolled its 300,000th electric vehicle off the production line.
How to Invest in China Stocks
With Admirals, you can invest in China stocks via ADRs that are listed on Western stock exchanges with the following commissions:
- UK stocks and ETFs – 0.1% of trade value, 1 GBP minimum commission.
- US stocks and ETFs – From $0.02 per share, 1 USD minimum commission.
- Germany and France stocks and ETFs - 0.1% of trade value, 1 EUR minimum commission
You can learn more about investing commissions on the Admirals Contract Specification page. You can search for global stocks and ETFs from the Invest.MT5 web platform and invest in four steps:
- Open an account with Admirals.
- Click on Trade on one of your live or demo trading accounts to open the web platform.
- Search for your symbol at the top of the search window.
- Click Create New Order in the bottom window to open a trading ticket to input your trade size, stop loss and take profit level.
Conclusion: Pros & Cons of Investing in China Stocks
Regarding advantages, China represents a market of over 1.4 billion people who are increasingly finding their way into disposable income. In the coming decades, China will develop a substantial middle class that represents an attractive consumer base for many companies.
The Chinese government is also investing heavily in digital developments, and many Chinese companies are at the forefront of technological innovation, for example in AI, cloud computing, and parcel delivery via autonomous drones.
In terms of disadvantages, the Chinese stock market can prove hard to grasp for foreign investors. Market sentiment can be tough to judge to outsiders of Chinese culture and society.
China is ruled by a single party, the Chinese Communist Party (CCP). The Chinese market is heavily dependent on the policies of the CCP, something which can change rapidly causing a higher level of volatility in Chinese stocks.
Continue Reading:
- Trading the Chinese Financial Market
- How to Invest in China's Shanghai Index
- How to Trade the Chinese Yuan & Renminbi
- How to Trade Asia Markets
- How to Build an Investing Portfolio
- Best Shares to Buy
FAQs on Best China Stocks
What are the best Chinese stocks to buy now?
The world's most commonly known Chinese stocks include Baidu, Alibaba, JD.com, Weibo, NIO, Tencent and many others. The best is subjective and will be down to the individual investor's risk tolerance.
What is China’s main stock market?
China has three main stock exchanges on its mainland, those being the Shanghai Stock Exchange (SSE), the Beijing Stock Exchange (BSE), and the Shenzhen Stock Exchange (SZSE).
Is it good to invest in Chinese stocks?
As with any investment, it can win or lose. Investors run the risk of losing a portion or all of their money and it is important to perform thorough research on how you expect stock prices to develop. Chinese stocks have their own set of risks and are considered more volatile than blue chip stocks.
INFORMATION ABOUT ANALYTICAL MATERIALS:
The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”). Before making any investment decisions please pay close attention to the following:
1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
2. Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
4. The Analysis is prepared by an independent analyst (Jitanchandra Solanki, hereinafter “Author”) based on personal estimations.
5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
6. Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.
7. Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.
