From Morningstar: 2024-04-12 11:36:52

Chinese stocks have struggled significantly, losing nearly 17% annually on the Morningstar China Index in the past three years compared to almost 8% gains by the Morningstar US Market Index. The Chinese market faced setbacks from a government crackdown and a property-market downturn, affecting recovery prospects for long-term investors.

Tencent is highlighted as one of the best Chinese stocks to buy now, trading at a significant discount and boasting exemplary capital allocation. The company has made strategic investments in mobile gaming and WeChat, positioning itself for continued growth and revenue opportunities across various segments, making it a compelling investment choice.

Yum China is another top Chinese stock selection, trading at a discount with standard capital allocation. The company has expanded rapidly, leveraging favorable lease terms post-pandemic to open new locations. Yum China’s focus on technology and digital development, coupled with its brand recognition and strong supply chain, positions it well for capturing market share in the Chinese restaurant industry.

Baidu rounds out the list of top Chinese stocks, offering potential for growth in AI, cloud, and autonomous driving. The company’s shift towards generative AI and cloud monetization presents opportunities for revenue diversification, though competition from industry leaders poses a challenge. Commercial success in these areas remains uncertain, impacting Baidu’s long-term outlook.



Read more at Morningstar: The Best Chinese Stocks to Buy