The 3 Best Chinese Stocks to Buy Now: September 2023

By most accounts, China’s economy is in trouble. A severe slowdown in consumer spending coupled with a full-blown crisis in the domestic property market are causing turmoil. After outpacing the rest of the world in terms of economic growth over the last 25 years, there are now concerns that China’s economy could enter a prolonged period of stagnation similar to Japan’s coming out of the 1980s. China’s government seems attuned to the problems and is starting to take steps to stimulate the economy, paying particular attention to the stock market, which has also been in a funk lately. Whether the government stimulus measures work or not, here are the three best Chinese stocks to buy.

Alibaba (BABA)

Change is afoot at Chinese technology giant Alibaba (NYSE:BABA). The company just introduced an advanced artificial intelligence (AI) model that can recognize images and hold more complex conversations with people. Called “Qwen-VL” and “Qwen-VL-Chat,” the new applications are open sourced. This means researchers, academics and companies worldwide can use them to create their own AI models. The two new AI products are built on the company’s large language model release earlier this year.

Alibaba released second-quarter financial results that managed to beat Wall Street forecasts. The company’s revenue grew by 14% year-over-year in Q2, while its profit rose 51% from a year earlier. Alibaba has also announced plans to split into six separate business units, with some planning to go public on their own. If all that weren’t enough, Alibaba’s current CEO Daniel Zhang is stepping down in September and will be replaced by company veteran Eddie Wu. BABA stock has risen only 3% this year and is trading at 20 times forward earnings.

Baidu (BIDU)

Chinese tech company Baidu (NASDAQ:BIDU) stumbled earlier this year with its botched introduction of Ernie Bot meant to rival AI chatbot phenomenon ChatGPT. Most analysts agree that Baidu rushed the launch in a failed attempt to capitalize on the hype surrounding AI. But despite the misstep, Baidu remains the best Chinese stocks for investors to play artificial intelligence. The countries scientists, engineers and coders have the reputation of being among the most sophisticated in the world.

Beyond AI, reasons to consider investing in BIDU stock include that the company is China’s equivalent of Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). They offer both a domestic search engine and online map and navigation product called “Baidu Maps.” Baidu’s search engine is the second largest in the world after Google and Baidu enjoys a 76% share of the online search market in China. Baidu was also the first Chinese company to be included in the NASDAQ-100 Index with a market capitalization of more than $50 billion.

BIDU stock has gained 20% year to date.

Nio (NIO)

Given the issues in the broader economy, it should come as no surprise that motor vehicle sales in China have taken a downturn. The latest numbers show that China’s total motor vehicle sales fell nearly 3% in June. The month of June marked the first decline in China’s vehicle sales since January of this year. However, sales were still up 2.5% to 9.65 million units sold in the first six months of this year, providing hope to the industry. And among the best Chinese stocks, Nio (NYSE:NIO) remains a top choice.

Nio just announced that it delivered 19,329 vehicles in August. Managing to hit above the range of 18,300 to 19,000 monthly deliveries the company had forecast for the July to September period. China’s EV market remains highly competitive and narrowly focused on domestic brands such as Nio. Increasingly, foreign automakers such as Tesla (NASDAQ:TSLA) are lowering prices and offering discounts to keep pace with domestic players.  The stock of NIO has increased 12% so far this year.

On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.

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