Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Chinese Shares Make a Big Comeback

Stock MarketsOct 10, 2021 09:30AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Chinese Shares Make a Big Comeback

Chinese shares rallied big time on Thursday, driven by bargain hunting, better than expected inflation numbers, and the easing of trade tensions between Washington and Beijing. Shares of Alibaba (NYSE:BABA) gained close to 9 percent in early morning trade, while Baidu (NASDAQ:BIDU) shares gained close to 6 percent.

I’m bullish on Alibaba and Baidu.

See Top Smart Score Stocks >>

Bargain Hunting

Bargain hunters are beginning to warm up to Chinese shares, following the recent rout that has driven the valuation of market leaders like Baidu (BIDU) and Alibaba (BABA) near their cash values.

Baidu's current Total Cash per Share is $486.36. Its Total Debt is 89.20B, and its current share price is $162.09.

Alibaba's current Total Cash per Share is $177.75. The company's Total Debt is $181.24B, and its current share price is $161.52.

One of these bargain hunters is Charlie Munger, Warren Buffett's Berkshire Hathaway (NYSE:BRKa) (BRK.B) vice-chairman. According to a regulatory filing, the legendary investor, a firm believer in China's potential, raised his position in Alibaba by nearly 83% in Q3.

Apparently, Munger's position in Alibaba is a vote of confidence in the company's future. Thus, the big rally in the company's shares on Wall Street in Thursday's regular trading session spread to other listed companies' shares.

Analysts are on the same side as Munger. They see Alibaba's shares trading 52.4% higher, 12 months from now. The average Alibaba price target is $246.20, and is considered a Strong Buy, with 24 Buy, 2 Hold and 1 Sell ratings.

Easing of Inflation Fears

Adding to the positive investor sentiment about Chinese stocks were better-than-expected inflation numbers, which were released on Wednesday. For August, China's annual inflation rate came at 0.8 percent, below the market expectations of 1 percent, driven by lower food prices. That's the lowest number in five months, easing fears of China's central bank raising interest rates.

Easing of Trade Tensions between Washington and Beijing

Trade tensions between the U.S. and China have been a headwind for Chinese shares. They induce fears of the rise of sanctions that could limit trade between the two countries, and consequently hurt the profitability of Chinese companies with big exposure to the U.S. market.

The good news is that these fears eased this week, following a high-profile meeting between Yang Jiechi, China's top diplomat, and U.S. National Security Advisor Jake Sullivan.

"The meeting showed that both China and the US are willing to enhance strategic communication, managing disputes and bringing bilateral ties back to the right track," Diao Daming, an associate professor at the Renmin University of China in Beijing, was quoted saying in the Global Times on Thursday.

In short, after several dismal weeks, things have begun to look up for Chinese shares. High-profile bargain hunters are beginning to emerge, tensions between Washington and Beijing are easing, and the macroeconomic environment is improving.

Disclosure: At the time of publication, Panos Mourdoukoutas owned shares of Alibaba and Bidu.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

Chinese Shares Make a Big Comeback
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Jack Bquick
Jack Bquick Oct 10, 2021 11:17AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Short term bounce. Communism can't produce a favorable environment for solid growth. They see it as a threat to their existence.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email