Although an intensifying clampdown by Chinese regulators make the prospects uncertain for many Chinese stocks, it is hard to argue against the optimism surrounding the growth prospects of some of these companies. With the global economy regaining traction quickly, we think stocks such as Baidu (BIDU), Yum China (YUMC), and Finvolution (FINV) are well positioned to generate substantial returns in the near term. So, let’s take a closer look. Despite the fact that several Chinese stocks are falling prey to an increasing regulatory clampdown, there is little doubt that they hold an immense potential for big growth in the near term. That’s in-part because the world’s second-largest economy generated record annual growth in the first quarter of 2021. In fact, China’s output jumped 18.3% year-over-year in the first three months of the year, its fastest rate since records began in the early 1990s.
While several economies, including Europe's, are still hamstrung by the effects of the COVID-19 pandemic, China and the United States are returning to the pre-pandemic growth levels. Although China’s regulatory crackdown and weak international relations remain a concern regarding many Chinese companies, the solid growth prospects of some of these companies should help their stocks rally in the near term.
Given the speedy recovery of the Chinese economy, Baidu Inc. (NASDAQ:BIDU), Yum China Holdings, Inc. (NYSE:YUMC), and FinVolution Group (NYSE:FINV) should witness solid earnings and revenue growth in the coming months. So, we think these stocks could be good additions to one’s watchlist.