Best Chinese Stocks To Buy And Watch: 5 Top Stocks For July

Numerous Chinese business are noted on U.S. markets. However which are the very best Chinese stocks to purchase or see today? Weibo (WB), NetEase (NTES), Bilibili (BILI), BYD Co. (BYDDF) and Li Auto (LI).




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China is the world’s most-populous nation and the second-largest economy with a booming urban middle class and amazing entrepreneurial activity. Often dozens of Chinese stocks are among the top performers at any given time, across an array of sectors.

But with China’s crackdown on Didi Global (DIDI) and other Chinese companies that recently listed in the U.S., purportedly over user data, China stocks once again are coming under pressure.

Best Chinese Stocks Across Many Industries

As the world’s largest internet market, it’s no surprise to see big growth from China stocks focusing on e-commerce, messaging or mobile gaming. Notable Chinese internet stocks include:

In electric vehicles, several Chinese companies are becoming serious rivals to Tesla (TSLA) in the world’s biggest auto market.

Several Chinese financial firms or brokerages listed in the U.S.

  • Futu Holdings (FUTU)
  • Up Fintech Holding (TIGR)
  • 360 Digitech (QFIN)
  • Noah Holdings (NOAH)

Several China stocks are in solar power

  • Daqo New Energy (DQ)
  • JinkoSolar (JKS)

For-profit education Chinese stocks are a notable non-tech sector.

  • New Oriental Education (EDU)
  • Tal Education (TAL)
  • 17 Education & Technology Group (YQ)
  • GSX Techedu (GOTU).

Don’t forget stocks in other fields, such as riding-hailing firm Didi Global (DIDI), beauty products maker Yatsen (YSG) or data-center operator GDS Holdings (GDS).

Chinese Stock Risks

Investors should be aware of significant risks with investing in Chinese stocks. The authoritarian state and its regulators can impose sweeping restrictions, fines or bans on major companies, often with little notice or transparency.

Alibaba ran afoul of regulators in late 2020, with regulators opening probes into internet platforms and suspending the Ant Group IPO. In April, China fined Alibaba $2.8 billion for anti-competitive actions and ordered it to change various practices.

Ant Group is limiting the scope of some of its businesses to comply with regulators’ demands.

On April 29, financial regulators ordered several big internet companies, including Tencent, to stop providing financial services aside from payments.

Further antitrust probes and fines are likely for other internet giants.

China’s cybersecurity regulator ordered app stores to remove Didi Chuxing, just days after Didi Global (DIDI) held one of the biggest U.S. IPOs in years. The cybersecurity regulator said Didi violated restrictions on the collection and usage of personal information, but didn’t offer any specifics. That came just days after announcing a probe and ordering Didi to suspend new user sign ups.

Meanwhile, China has expanded its probe to two other Chinese companies that recently listed in the U.S.: Logistics platform Full Truck Alliance (YMM) and jobs-search app Kanzhun (BZ). Beijing has ordered both to halt new user registrations as well.

More broadly, China will impose cybersecurity reviews on internet and data-centric companies listing overseas. Reportedly, Hong Kong listings will be exempt, suggesting far fewer Chinese companies listing in the U.S. going forward. Many big U.S.-listed Chinese companies already have secondary listings in Hong Kong.

Accounting fraud, while less likely with institutional-quality names such as Alibaba, remains a concern. Luckin Coffee admitted to widespread fraud in 2020. Fraud charges alone can trigger massive share price losses.

For-profit education firms, which have faced accounting questions, have come under pressure as local and national officials call for new regulations for the sector.

Meanwhile, a new U.S. law could force Chinese companies to delist from U.S. markets. That threat isn’t imminent, and could be averted with negotiations between the Treasury Department and Beijing over accounting oversight. Still, it’s something that could loom large for China stocks in the coming years.


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China Stock Investing Via ETFs

One way to minimize individual China stock risks is via ETFs. Another advantage of buying ETFs is that a growing number of Chinese companies are listing in Hong Kong or Shanghai, instead of in addition to the U.S.

KraneShares CSI China Internet ETF (KWEB) tracks major Chinese internet companies. Many Chinese stock holdings in the KWEB ETF are U.S.-listed or traded, such as Alibaba stock, JD.com, Tencent, Pinduoduo and Bilibili, but KWEB also holds companies listed on Chinese markets. Direxion Daily FTSE China Bull (YINN), a three-times levered ETF of the 50 largest companies listed in Hong Kong, including Alibaba, JD.com and Tencent stock, but its biggest weights are in financials. (The Direxion Daily FTSE China Bear (YANN) is a three-times levered ETF shorting Hong Kong’s biggest companies.)

Stock Market Trend Key

As always, investors should be following the overall stock market trend, adding exposure in confirmed uptrends and paring exposure or going fully to cash in corrections or bear markets. Right the stock market rally remains under pressure.


Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live.


Best China Stocks To Buy: Key Ingredients

Focus on the finest stocks to purchase and see, not just any Chinese companies.

IBD’s CAN SLIM Investing System has a proven track record of significantly outperforming the S&P 500. Outdoing this industry benchmark is key to generating exceptional returns over the long term.

Look for companies that have new, game-changing products and services. Invest in stocks with recent quarterly and annual earnings growth of at least 25%.

Start with those with strong earnings growth, such as Alibaba or Pinduoduo stock. If they’re not profitable, at least look for rapid revenue growth as with Nio stock. The best China stocks should have strong technicals, including superior price performance over time. But we’ll be highlighting stocks that are near proper buy points from bullish bases or rebounds from key levels.

Chinese stocks were out of favor for much of 2021. Whether it’s a general malaise for growth stocks or EV names such as Nio and Xpeng, or a regulatory crackdown for Alibaba, JD.com and other internets, U.S.-listed Chinese stocks generally did not fare well.

After a recent revival, China stocks are under pressure once again.


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Best Chinese Stocks To Buy Or Watch

Company Ticker Industry Group Composite Rating
Li Car LI Auto Manufacturers 70
Bilibili BILI Internet-Content 62
BYD BYDDF Auto Manufacturers n.a.
NetEase NTES Computer Software-Gaming 59
Weibo WB Internet-Content 96

So let’s analyze these five top China stocks: Li Auto stock, Bilibili stock, BYD stock, NetEase stock and Weibo stock.

Li Auto Stock

Li Auto is one of several Chinese electric vehicle makers that trade in the U.S., competing with each other and Tesla (TSLA).

While still losing money, Li Auto has seen huge sales growth from its one current model, the Li One SUV. Li One is actually a hybrid, with a small gasoline engine to extend its range.

After a huge run from its July 2020 IPO to a record 47.70 on Nov. 24, 2020, Li Auto stock plunged to 15.98 on May. Shares more than doubled to 36.66 on July 1, but have since pulled back, like other EV stocks and highly valued growth names generally.

Investors could view the recent pullback as part of a handle in a massively deep consolidation. On July 21, Li Auto stock spiked higher, breaking the downtrend of that handle. That offers an extremely aggressive entry point.

Li Auto was added to SwingTrader on July 21.

Li stock has a 70 IBD Composite Rating out of 99.

Bilibili Stock

Bilibili provides an online entertainment platform targeting younger generations in China. In addition, the platform includes videos, live broadcasting, and mobile games.

The company is not yet profitable, and is projected to keep losing money through at least 2022. But sales growth has been strong, with Q1 revenue up 82%.

Bilibili stock nearly tripled from a late November breakout to the Feb. 11 peak of 157.66. Shares then corrected 46% to 84.40 on May 13, finding support just above the 200-day line.

In late June, BILI stock cleared an early entry. But shares retreated. BILI stock has once again above its 50-day line and making some progress from that level.

Investors might use 129.34 as a new early entry.

BYD Stock

BYD Co. is the biggest pure-play Chinese EV maker, making electric cars and buses, as well as many hybrids. It’s also a major EV battery maker. Warren Buffett’s Berkshire Hathaway (BRKB) is a longtime investor.

Most of all, BYD is profitable, in sharp contrast to Li Auto, Nio and Xpeng Motors.

BYD is listed in Hong Kong and trades over the counter in the U.S. So the BYDDF stock chart is prone to lots of little gap ups and downs.

BYD stock corrected nearly 52% from its January peak of 35.94 to its May 12 low of 17.41, though that’s a smaller decline than Li Auto stock. Shares ran up to 31.30 in late June, but have pulled back again, but found support at its 50-day line on July 20, rebounding higher on July 21.

Investors could view the current pullback as a handle, with a 31.40 buy point.  BYD stock could soon offer an early entry by breaking a downtrend in its handle, like Li Auto did on July 21.

But a short base within that larger consolidation would be preferable.

NetEase Stock

The Chinese mobile gaming giant has been listed in U.S. markets since 1999, and was amongst the original hot Chinese stocks early in the 21st century.

NetEase is profitable, with growth returning in the latest quarter.

NTES stock’s current base is only 26% deep, finding support around its 200-day moving average several times in recent months. It’s currently above its 50-day line.

In a better market, investors might see NetEase stock as just below a downward-sloping trend line, or eye 116.62 as an aggressive entry. However with growth stocks and especially Chinese names struggling, investors might wait for NTES stock to hit 120.94, just above a late May peak, as an early entry.

The official buy point for NetEase stock is 134.43.

Weibo Stock

Weibo stock is a popular social media firm, often compared to Twitter (TWTR).

After a tough 2020 due to the pandemic, growth is roaring back. Weibo earnings rose 90% in the latest quarter with revenue up 42%, both accelerating for the past two quarters.

WB stock is in a cup base that’s just 31% deep. On July 7, shares briefly cleared the 63.65 buy point but closed below that key level. Weibo has gapped up on reports that it’s mulling a go-private move that could value the company at around $20 billion. Even after big gains on that news, WB stock has a market cap of around $14 billion.

The company has denied the go-private report, however.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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Jobber Wiki author Frank Long contributed to this report.