Chinese stocks have underperformed for several quarters as concerns about its slow economic recovery had investors looking elsewhere. However, after solid results from JD.com and better-than-expected economic data, traders are putting these stocks back on their radars. 🧭
Yesterday’s data showed that China’s industrial production and retail sales topped expectations in October, rising 7.6% and 4.6% YoY, respectively. Real estate remains a soft spot, with investment falling 9.3% YoY. With its government assessing new measures to bolster economic growth, the International Monetary Fund (IMF) recently raised its 2023 and 2024 growth forecasts. 🔺
Meanwhile, the e-commerce group JD.com showed signs of life in the third quarter. Its $0.92 per share in earnings and $34.2 billion in revenues topped analyst expectations. The consumer tech giant has been cutting costs to boost profitability in a slow sales environment, using lower prices and promotional activity to attract customers and buoy sales. 📉
Below is a chart of popular Chinese internet ETF $KWEB perking up recently. It remains in a historic drawdown, over 70% below its 2021 highs. However, some traders and investors anticipate a trend change could occur if it breaks above the downtrend line from its late 2021 highs. 📉
The recent improvements in price action and economic data have fund managers looking for opportunities among depressed mainland stock markets. Whether or not this turn in sentiment will stick remains to be seen. But for now, the market is back in focus on the long side. 👀