Last week it was announced that in the last quarter China's economic growth fell to its lowest, 7.4%, in more than three years. But there were a few silver linings: Retail sales were up 14.4%, and there were steady increases in industrial asset investments. Altogether, the data suggests stabilization isn't far off. But this raises the question: Where do we invest in China today?
For ideas, we screened a universe of Chinese stocks for those with bullish sentiment from institutional investors, with significant net institutional purchases over the last quarter representing at least 5% of share float.
This indicates that institutional investors such as hedge fund managers and mutual fund managers, who often have access to more sophisticated market data than average investors, expect these names to outperform.
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research. (click to enlarge)
Tool provided by Kapitall (www.kapitall.com).
Do you think these Chinese stocks will outperform like the smart money expects? Use this list as a starting point for your own analysis.
1. New Oriental Education & Technology Group (NYSE:EDU): Provides private educational services primarily in the People's Republic of China. Market cap at $667.01M, most recent closing price at $17.37. Net institutional purchases in the current quarter at 7.9M shares, which represents about 6.59% of the company's float of 119.86M shares.
2. Trina Solar Limited (NYSE:TSL): Designs, develops, manufactures, and sells photovoltaic (PV) modules worldwide. Market cap at $336.06M, most recent closing price at $4.13. Net institutional purchases in the current quarter at 6.7M shares, which represents about 10.13% of the company's float of 66.11M shares.
3. 21Vianet Group, Inc. (NASDAQ:VNET): Provides carrier-neutral Internet data center services in China. Market cap at $690.3M, most recent closing price at $12.34. Net institutional purchases in the current quarter at 2.4M shares, which represents about 7.41% of the company's float of 32.37M shares.
4. TAL Education Group (NYSE:XRS): Provides K-12 after-school tutoring services in the People's Republic of China. Market cap at $678.72M, most recent closing price at $8.76. Net institutional purchases in the current quarter at 10.8M shares, which represents about 37.24% of the company's float of 29.00M shares.
5. Youku Inc. (NYSE:YOKU): Operates as an Internet television company in the People's Republic of China. Market cap at $3.19B, most recent closing price at $19.60. Net institutional purchases in the current quarter at 34.8M shares, which represents about 62.91% of the company's float of 55.32M shares.
Written by Kapitall's Rebecca Lipman. Institutional data sourced from Fidelity, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: Business relationship disclosure: Kapitall is a team of analysts. This article was written by Rebecca Lipman, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.