Bull In A China Shop: 3 Chinese Stocks With Buy Ratings

Summary

• Recession fears and global economies are struggling. China’s COVID-related lockdowns have recently begun to loosen, which may serve as an opportunity for investors.
• China’s markets have started to rally. Although political uncertainties can deter some investors looking to invest in Chinese companies, now may be the time to consider some high-risk, high-reward investments.
• Many emerging stocks are underperforming. The MSCI China sold off ~27% over the last year because of lockdowns and labor issues, compared to the S&P 500, down ~11%.
• Although emerging markets have been struggling amid global inflationary pressures, sentiment toward Chinese tech has begun to steady. Consider our diverse group of Chinese stocks on the rise.
• They possess great momentum, solid quant ratings, lots of cash from operations, and strong fundamentals.

China Lockdown

Following months of intense pandemic restrictions, China's "zero COVID" policy forced residents to isolate themselves at home, the masses were quarantined, and business operations halted. The sacrifices made by residents and businesses in some of the world's biggest hubs like Shanghai and Beijing are finally seeing some reprieve.

As we look at the decline in international markets like China, investors willing to take some risks when others are fearful may see the benefits. As I recently wrote in Diamonds In The Rough: 3 Top Emerging Market Stocks, international stocks have been struggling under inflationary and recessionary pressures. Over the last year, Chinese markets have sold off by more than 27%. These selloffs have created labor shortages throughout the nation and affected global shipping and supply chains around the globe. Finding good stocks in emerging markets can require some digging. Seeking Alpha offers tools to create your own stock screeners to deliver investors' the names of fundamentally sound companies in some of the biggest developing nations. I used these screens to identify these stocks. Based on our quant ratings, I have selected three Chinese companies with Buy recommendations to consider diversifying a portfolio.

Investing In The China Reopening

Any company domiciled in China has sustaining political risks. One of the biggest risks involved China's poor healthcare system - the Achilles heel for reopening - forcing China to have multiple countrywide shutdowns given the lack of access to adequate healthcare to fight the pandemic. These impacts were felt around the globe, given the shortages in the Chinese labor market, demand, and global supply chains.

Politics, government regulations, and transparency are other concerns for investors. China has a reputation for falsifying data reports that call into question the integrity of company financials. In addition, the government-imposed restrictions, censorship, etc., have all posed challenges and concerns for investors. Take, for instance, Alibaba's (

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.