In this article we present the list of 12 Best Chinese Stocks to Buy Now. Click to skip ahead and see the 5 Best Chinese Stocks to Buy Now.

Alibaba Group Holding Limited (NYSE:BABA), Pinduoduo Inc. (NASDAQ:PDD), and Trip.com Group Limited (NASDAQ:TCOM) are three of the best Chinese stocks to buy now according to some of the brightest and most successful money managers in the world.

Investors seem to be rather split on the Chinese market and the near-to-medium-term future of the world’s second-largest economy. Chinese stocks took a beating throughout much of 2021 and 2022, with the iShares China Index ETF, which tracks the 50 largest Chinese companies by market cap, losing 35% of its value during that time.

Those losses were in spite of a late 2022 rally driven by investor enthusiasm over the December withdrawal of China’s economically devastating zero-Covid policy. The rebound persisted into early 2023, but has since sputtered out and reversed.

Has China’s Expected Reopening Boom Been a Bust?

At the heart of the new investor uncertainty is the rather pedestrian performance of China’s economy during Q1, its first full quarter without Covid restrictions in place. Corporate revenue grew by just 1.5% during the quarter, falling well short of expectations, and imports fell by 8% (and another 7.9% in April), suggesting weak consumer demand.

And those are just some of the economic issues facing the country, which doesn’t even factor in the ball of wax that is the country’s geopolitical climate and regulatory backdrop, which kept many investors away from the country even when China was truly booming.

Analysts are still projecting China to grow GDP by as much as 6% this year, but that certainly seems doubtful in light of the country’s first quarter output.

Do the Potential Rewards From Chinese Investment Now Outweigh the Risks?

The weak overall sentiment towards China does provide bold investors with the opportunity to snatch up a wide range of quality Chinese stocks at a more than fair price. Many of the best Chinese stocks are trading well below analyst estimates, as we detailed in our look at the 10 Most Promising Chinese Stocks According to Analysts.

Several Chinese companies are also among the most profitable in the world, as we discovered during our research of the 11 Most Profitable Chinese Stocks, as they pull in tens of billions of dollars in net income annually. Unfortunately, most of those stocks don’t trade on U.S. exchanges.

The best Chinese stocks to buy now also provide exposure to various industries, including e-commerce, electric vehicle automakers, biotechs, and real estate platforms, so there’s bound to be something of interest for investors of all stripes.

Let’s get into it then and see which Chinese stocks are the best to buy in 2023.

Photo by Edward He on Unsplash

Our Methodology

The following list of the Best Chinese Stocks to Buy Now is ranked based on hedge fund sentiment. We follow a select group of hedge funds because Insider Monkey’s research has uncovered that their consensus stock picks can deliver outstanding returns.

All hedge fund data is based on the exclusive group of 900+ funds tracked by Insider Monkey that filed 13Fs for the Q1 2023 reporting period.

12 Best Chinese Stocks to Buy Now

12. XPeng Inc. (NYSE:XPEV)

Number of Hedge Fund Shareholders: 20

Trip.com Group Limited (NASDAQ:TCOM), Alibaba Group Holding Limited (NYSE:BABA), and Pinduoduo Inc. (NASDAQ:PDD) are three of the best Chinese stocks to buy now according to hedge funds. Another compelling stock in the same vein is Chinese automaker XPeng Inc. (NYSE:XPEV), which saw a slight uptick in ownership among the select group of hedge funds tracked by Insider Monkey during Q1 following four consecutive quarters of selling.

Overall, there’s been a 42% decline in the number of funds long XPeng Inc. (NYSE:XPEV) since the final quarter of 2021. Jos Shaver’s Electron Capital Partners added XPEV to its 13F portfolio during Q1, while Cliff Asness’ AQR Capital Management unloaded its stake.

XPeng Inc. (NYSE:XPEV) launched its P7i sports sedan in March and order intakes for the vehicle have been solid. In April, the automaker delivered just over 7,000 smart EVs, a slight uptick from a month earlier. The company has also been working furiously to speed up production and reduce costs, which resulted in the development of a new in-house vehicle-making platform which it unveiled last month. XPeng believes the new platform could reduce the costs of making powertrain systems and intelligent driving systems by 25% and 50% respectively by the end of next year.

11. Zai Lab Limited (NASDAQ:ZLAB)

Number of Hedge Fund Shareholders: 21

There’s been a similar hedge fund flight in recent quarters from Zai Lab Limited (NASDAQ:ZLAB), the Chinese biopharmaceutical company that has more than 50 clinical trials underway. There’s been a decline in smart money ownership of the stock during five of the past six quarters, amounting to a 43% drop during that period. Andreas Halvorsen’s Viking Global holds the biggest position in ZLAB as of March 31, totaling 2.33 million shares valued at $77.5 million.

One of 10 High Growth Chinese Stocks To Buy, Zai Lab Limited (NASDAQ:ZLAB) could see no less than eight new drug launches in the coming three years, which would further augment its existing stable of four cancer treatments. Zai Lab has a big advantage over American biotechs in that regard, as the regulatory process for drug approval is far quicker and much less costly in China than it is in the U.S.

Citi believes Zai Lab Limited (NASDAQ:ZLAB) has a solid commercial foundation in place but that the big question now is whether or not the company can succeed with its next wave of product launches and drive revenue higher like the market has been waiting for. Citi has a $130 price target and ‘Buy’ rating on the stock.

10. Li Auto Inc. (NASDAQ:LI)

Number of Hedge Fund Shareholders: 22

Li Auto Inc. (NASDAQ:LI) is another Chinese automaker that is relatively popular among top hedge funds, being owned by 22 of them as of March 31. That’s nonetheless down from a peak of 31 during the fourth quarter of 2020. Vincent Gao’s CoreView Capital and Yi Xin’s Ariose Capital are quite bullish on Li Auto Inc. (NASDAQ:LI), having greater than 10% 13F exposure to the stock.

With supply chains in China improving late last year, the electric automaker had a strong close to 2022, hitting a record number of vehicle deliveries in December and growing total vehicle deliveries by 31.5% during Q4. That spurred Li Auto Inc. (NASDAQ:LI) to 66.2% sales growth during the quarter, while gross profit rose by 49.8% to $518 million.

9. Vipshop Holdings Limited (NYSE:VIPS)

Number of Hedge Fund Shareholders: 29

Vipshop Holdings Limited (NYSE:VIPS) surged in hedge fund popularity during Q1 of 2021 when the stock briefly surged by as much as 62% during the quarter. Both of those gains were short-lived however, as the stock had given back all of those gains by May and hedge funds quickly began heading for the exits. Hedge fund ownership of VIPS is down by 46% since that quarter.

Vipshop Holdings Limited (NYSE:VIPS) still ranks as one of the best Chinese stocks to buy now despite its revenue growth streak coming to an end in 2022. The online retailer, which sells discounted brand-name apparel and accessories, is a highly profitable company, growing adjusted net income by 14% during 2022 and earning $0.53 per share in adjusted earnings during Q4.

Vipshop Holdings Limited (NYSE:VIPS) shares are also trading at fairly attractive valuations on both the sales and earnings fronts, including boasting a forward earnings ratio of just 8.16x and a price-to-sales ratio of 0.64x.

8. New Oriental Education & Technology Group Inc. (NYSE:EDU)

Number of Hedge Fund Shareholders: 31

New Oriental Education & Technology Group Inc. (NYSE:EDU) was considered one of the best Chinese stocks to buy among hedge funds for several quarters in 2020 and 2021. However, sweeping government regulations that impacted the for-profit education sector in China sent hedge funds running from the stock in 2022.

Nonetheless, several funds maintain high conviction in New Oriental Education & Technology Group Inc. (NYSE:EDU) as it adjusts to and navigates the new environment, including Fang Zheng’s Keywise Capital Management, which is the company’s largest shareholder and boasts a whopping 35% 13F exposure to the stock.

One way in which New Oriental Education & Technology Group Inc. (NYSE:EDU) is taking charge of the situation is by expanding its testing and studying services into overseas markets, which it grew by 13% and 5% respectively in its fiscal Q3 of 2023. The company’s overall net revenue grew by 22.8% to $754 million, while net income surged by 167% to $81.6 million.

7. Yum China Holdings, Inc. (NYSE:YUMC)

Number of Hedge Fund Shareholders: 35

Yum China Holdings, Inc. (NYSE:YUMC) has been one of the most stable Chinese stocks in terms of hedge fund ownership over the past several years and the number of funds long YUMC remained flat during Q1. Guardian Capital’s GuardCap Asset Management holds by far the largest YUMC position, owning 8.69 million shares worth $551 million as of March 31.

With Covid lockdowns now over in China, Yum China Holdings, Inc. (NYSE:YUMC) was able to accelerate its growth in Q1 of this year compared to a year earlier, growing revenue by 9% to $2.92 billion and same-store sales growth by 8%. It also achieved triple-digit growth in most profitability metrics, including a 189% surge in net income to $289 million.

Baron Funds is bullish on Yum China Holdings, Inc. (NYSE:YUMC)’s strong balance sheet and earnings power, as it discussed in its Q2 2022 investor letter:

6. KE Holdings Inc. (NYSE:BEKE)

Number of Hedge Fund Shareholders: 39

KE Holdings Inc. (NYSE:BEKE) closes out the first half of our list of the best Chinese stocks and has proven to be consistently popular among hedge funds. Overall ownership of the stock has remained virtually unchanged over the past six quarters, though several of the company’s biggest shareholders were adding to their positions in Q1, including Lei Zhang’s Hillhouse Capital Management and Philippe Laffont’s Coatue Management.

KE Holdings Inc. (NYSE:BEKE) is a major player in the Chinese real estate market, operating two platforms that allow homeowners and homebuyers to connect. It accounted for about 21% of the gross transaction volume of all home sales in China during Q4 of 2022 and has a staggering 267 million homes in its database.

KE Holdings Inc. (NYSE:BEKE) has also been expanding into other segments of the housing market that could provide valuable synergies, including the home renovation market when it purchased Shengdu Home Renovation last year. That acquisition helped KE Holdings grow its renovation revenue 25-fold in 2022 to $700 million.

Pinduoduo Inc. (NASDAQ:PDD), Trip.com Group Limited (NASDAQ:TCOM), and Alibaba Group Holding Limited (NYSE:BABA) are near the top of the list of best Chinese stocks to buy now. See where they rank and why they’re so coveted by clicking the below link.

Click to continue reading and see the 5 Best Chinese Stocks to Buy Now.

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Disclosure: None. 12 Best Chinese Stocks to Buy Now is originally published at Insider Monkey.