Do You Have These Top Chinese Tech Stocks On Your 2021 Watchlist?
Chinese tech stocks have made strong gains in 2020 as COVID-19 pushed more commercial activities online. But it’s not all smooth sailing for the sector in China, to say the least. Recall that President Trump signed a bill calling for the delisting of foreign companies that don’t adhere to the same accounting standards. And if that’s not enough, new antitrust rules in China to rein in top tech stocks like Alibaba (BABA Stock Report) and Tencent (TCEHY Stock Report) have sparked fears of mass exodus. However, as worrying as things may seem, there are still high growth companies that are still worth consideration. Perhaps, you can even hold these over the coming few years.
“For investors to properly position their portfolios for the post-Covid world ahead, in the new world order, they need to have more of their investment portfolios allocated into China … Geopolitical diversification is going to be a much more important portfolio … consideration in the years ahead … They should increase their allocation to Chinese shares up to 20% over the next decade.” – Paul Colwell, Head of Advisory Portfolio Group for Asia, Willis Towers Watson.
The confidence in Chinese tech stocks was evident this week in the stock market. This came when shares of Alibaba bounced back from a historical sell-off that’s seen the ‘Amazon of China’ lose 30% of its value in just two months. But the fear seems to have subsided, and investors may finally have come to their senses. After all, it isn’t any country’s interest to break up, or destroy such a profitable enterprise, right? With the recovery in sentiments on BABA stock, investors may realize that the market overreacted with regards to the top Chinese tech stocks. With all that being said, do you have these tech stocks from China on your watchlist going into 2021?
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Best Chinese Tech Stocks To Buy [Or Avoid] Now: JD.com
JD.com (JD Stock Report) is China’s largest direct retailer and the second-largest e-commerce company after Alibaba. Unlike Alibaba, which mainly hosts listing platforms for sellers who handle their own inventories, JD takes on inventories and fulfills those orders with its own logistics network. It also possesses one of the largest drone delivery systems and solid infrastructure. These would enable the company to continue its growth in the foreseeable future, making JD a top e-commerce player in China. The company’s stock price is up 128% year-to-date as of Tuesday’s closing.
The company has recently announced strong third-quarter results last month. JD.com reported net revenue of $25.7 billion, representing a 29.2% increase from a year earlier. In this quarter, the company also saw its annual active customer accounts increase by 32.1% to 441.6 million. It is the clearest indication that the company has not shown any sign of stopping. JD.com demonstrated strong growth momentum with a compound annual growth rate of 34% for its net revenue from 2015 to 2019. Not many companies can pull off such an impressive feat.
Earlier this month, JD.com customers got to participate in a trial to try out China’s new digital currency. Known officially as the Digital Currency Electronic Payment (DCEP), the digital yuan was conducted as a partnership between JD Digits, the company’s financial arm, with the People’s Bank of China. It differs from other cryptocurrencies as DCEP is backed by the country’s central bank as a digital version of the yuan. This digital currency can be used in JD’s offline stores and outside the company’s ecosystem. Considering all these, will JD stock be a top tech stock to watch?
Best Chinese Tech Stocks To Buy [Or Avoid] Now: Pinduoduo
Next up, Pinduoduo (PDD Stock Report) easily tops the list of best Chinese tech stocks to buy. The company’s stock price quadrupled this year as Pinduoduo continued to impress investors with its robust revenue growth. For the uninitiated, Pinduoduo is one of the largest e-commerce platforms in China with a stronger focus on lower-tier cities in China. However, like many tech companies, it remains unprofitable as it faces stiff competition from JD.com and Alibaba. But why is it trending lately?
Here’s why. No doubt, we all know Alibaba controls a huge portion of the e-commerce market in China. And commanding such a huge market share in China comes with many perks. And that includes offering exclusive deals that will put its competitor, in this case Pinduoduo, onto the wayside. Fortunately, China’s antitrust regulator began to take action on such practice and launched an antitrust probe on Alibaba earlier this month. In light of such news, PDD stocks have moved higher this week.
As you may or may not know, Pinduoduo became China’s largest online platform for agricultural products this year. Sales of fresh produce on Pinduoduo reached 136.4 billion yuan ($19.3 billion) last year. That represented nearly 14% of the company’s total gross merchandise volume. And that’s not all. The number could almost double this year. Also, Pinduoduo plans to leverage that growth to expand its new app, Duo Duo Maicai, which literally means “More Grocery Shopping”, which launched back in August. To top it all off, the company also aggressively expanded its offering into major cities like Beijing and Shanghai. If all works out as planned, it could help Pinduoduo shake off its reputation as a low-end marketplace and compete with its bigger rivals. With so many developments going on with the company, would PDD stock bring big gains in the coming year?
Best Chinese Tech Stocks To Buy [Or Avoid] Now: Bilibili
If you’re looking for stocks that appeal to Gen Z consumers, you probably have allocated a portion of your money for Roblox’s IPO that was supposed to take place this month. Perhaps, like many others, you are disappointed about the IPO delay. Fret not, as there are alternatives in the stock market that are equally engaging as Roblox. Yes, you heard that right, Bilibili (BILI Stock Report) is one Chinese tech stock worth adding to your watchlist.
Bilibili is a digital media company that provides anime, comics, and gaming contents to China’s Gen Z users. The company licenses mobile games, streams anime series and live video, and hosts digital comics on its platform. It also sells tie-in products through its online marketplace. Admittedly, it may not be a household name in the U.S. But it’s worth noting that Bilibili has more daily active users (53.3 million) than Roblox (31.1 million). Of course, BILI stock has nearly quadrupled this year. Therefore, you may be wondering if it can continue its momentum going forward.
In the third quarter fiscal report, Bilibili recorded total net revenues of $475.1 million. That was a 74% increase from a year ago. Besides, average monthly active users reached 197.2 million, a jump of 54% from the same period in 2019. Of these, monthly paying users rose to 15.0 million, an 89% increase year over year. With its strong growth in user base and monetization, is BILI stock the best Chinese tech stock to buy in 2021?