China & Hong Kong Stock Picks (October 2024)

China’s $19T global time bomb + Guangzhou Automobile Group, Great Wall Motor, Ping An Insurance, Sinotruk, Li Auto, New Oriental Education, PDD Holdings, Xiaomi, Geely, Leapmotor, etc.

As covered on Sunday, this talk with UK-Greece based DeFi Advisors’ founder is well worth a listen to now that US elections are over as China will likely need to start making some hard decisions (and I don’t mean about Taiwan - although that could make for an interesting distraction…). Nicoletos gave a level-headed reality check about China as he believes they will soon be forced to do bank bail-ins. This will also send their currency down and make them more competitive export-wise just as Trump is likely to increase tariffs and other restrictions on foreign imports (which to my knowledge, does not require Congressional approval):

🎙️🇨🇳🌐 Is China’s $19 Trillion Crisis a Global Time Bomb? | Michael Nicoletos (All Wealthion Videos) 47:50 Minutes (October 2024)

China’s $19 trillion crisis could send shockwaves through the global economy. Andrew Brill welcomes veteran macro investor and DeFi Advisors Founder & CEO Michael Nicoletos to explore his insights on how China’s debt load, bad investments, and capital controls may lead to a currency and banking crisis and what this could mean for global markets. He also shares his top investment safe havens and explains why U.S. markets, despite high valuations, remain resilient, thanks to global liquidity flows.

Chapters:

1:06 - Michael’s Career Background

02:34 - U.S. Economy Outlook

04:04 - The U.S. Dollar’s Strength

5:10 - U.S. Economy & USD’s Role In The Global Economy

11:10 - The Effects of a Strong US Dollar

12:16 - A Look At U.S. Equity Markets

14:37 - China’s Terrible Economic Mess

21:53 - Yuan Devaluation & Banking Crisis Risks

21:32 - Impact of China’s Crisis on Global Markets

25:40 - Investors Are Exiting Chinese Markets, Not Entering

31:50 - Audience Question: BRICS Currency: A Threat to the U.S. Dollar?

34:39 - Audience Question: Will U.S. Deficits Lead to Inflation?

39:09 - Audience Question: Will Treasuries Rally Again During a Market Panic?

40:15 - Audience Question: Emerging Markets Michael Is Bullish

41:25 - Audience Question: Can Central Banks Allow Significant Market Drops?

42:41 - Michael’s Investment Recommendations

With that said, this does not mean you should not still be cautiously looking at and paying attention to Chinese stocks.

Stocks covered by a couple of equity research providers and included in this post:

[Note: On desktop browsers, an autogenerated table of contents will appear on the left side linked to each stock. I will add those links below after publishing/emailing this post…]

PICC Property and Casualty Co Ltd, RemeGen, Guangzhou Automobile Group, Shenzhen Mindray Bio-Medical Electronics Co., Ltd., BYD Company, Zhejiang Dingli Machinery, Haier Smart Home, WuXi AppTec, NAURA Technology Group, Shennan Circuits, Cimc Enric Holdings Ltd, Jiangsu Hengli Hydraulic, Shengyi Tech, Topsports, Li Ning Co., Ltd, Luxshare Precision Industry, Wingtech Technology, Will Semiconductor Co Ltd, Xtep, Great Wall Motor, GoerTek Inc, EDA Group Holdings, Zhongji Innolight, New Oriental Education, Ping An Insurance, Foxconn Interconnect Technology, iQIYI, Baidu, ZTE, Horizon Construction Development, BaTeLab Co Ltd, Yancoal Australia, DPC Dash, JD.com, Geely Automobile Holdings, Zhejiang Leapmotor Technology, Anta Sports, Weichai Power, Sinotruk Hong Kong Ltd, Alibaba & Tencent

CMB International Capital Corporation, a wholly owned subsidiary of China Merchants Bank (SHA: 600036 / HKG: 3968 / OTCMKTS: CIHKY / OTCMKTS: CIHHF), also has a monthly list of 20+ high conviction stock ideas - namely Chinese stock picks (see our May, June, July, August, September, October, November, December, January-February, March, April, May, June, July-August & September posts summarizing those) BUT these lists do not change too much from month to month. Stocks covered by the CMBI October list (including Additions and Deletions) and included in this post with updated stats and charts include:

Li Auto, Geely Automobile Holdings, China Hongqiao Group, Bosideng International Holdings, JNBY Design, Xtep, Proya Cosmetics, BeiGene, China Pacific Insurance (Group), PICC Property and Casualty Co Ltd, Tencent, Alibaba, PDD Holdings (Pinduoduo), Greentown Service Group Co, FIT Hon Teng (Foxconn Interconnect Technology), Xiaomi, BYD Electronic International, Zhongji Innolight Co Ltd, NAURA Technology Group & Kingdee International Software

Short Idea: Sinotruk Hong Kong Ltd

As mentioned Monday, I have further cleaned up the China, Hong Kong & Macau Stock Index adding links to Wikipedia (🇼), domicile info, ensuring the primary stock listing appears first, etc.:

And any suggestions or comments for improving stock index pages or monthly China & Hong Kong Stock Picks posts (which help fill the index page) would be appreciated.

And as always, this post is provided for informational purposes only (and to make your life easier…). It does not constitute investment advice and/or a recommendation…

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🔬 Research analysis (including articles/blog posts from fund managers, etc.); 🎥 Video; 🎙️ Podcast; 🎬 Webinar; 📰 Newspaper/magazine article; 📯 Press release; 💻 Substack/blog/website article; ✅ Our own posts; 🗃️ Archived article; ⏰ Upcoming webinar or event; ⚠️ Disclosures or restricted access e.g. based on your location, investor status, etc.; 🇼 Wikipedia page; 🏷️ Tagged links to other posts about the stock.

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PICC Property and Casualty Co Ltd

🔬 PICC P&C (2328 HK) - 3Q CoR miss dragged by non-auto claims (CMB International) 10-31-2024 ⚠️

• 🇨🇳🏛️ PICC Property and Casualty Co Ltd (HKG: 2328) 🇨🇳 - Largest non-life insurance company in mainland China. 🇼 🏷️

• Price/Book (Most Recent Quarter): 1.02

• Forward P/E: 7.66 / Forward Annual Dividend Yield: 6.23% (Yahoo! Finance)

RemeGen

🔬 RemeGen (9995 HK) - Strong sales in Q3, with a narrowed net loss (CMB International) 2024-10-31 ⚠️

• 🇨🇳 🇺🇸 RemeGen (SHA: 688331 / HKG: 9995 / FRA: REG / OTCMKTS: REGMF) 🇨🇳 - Biologic drugs in the key therapeutic areas of autoimmune oncology & ophthalmic diseases. 🏷️

• Price/Book (Most Recent Quarter): 3.60

• Trailing P/E: 72.95 (no forward P/E) / Forward Annual Dividend Yield: N/A (Yahoo! Finance)

Guangzhou Automobile Group

🔬 GAC Group (2238 HK) - 3Q miss; new models, cost cut as key in FY25 (CMB International) 10-31-2024 ⚠️

• 🌐🏛️ Guangzhou Automobile Group (HKG: 2238 / SHA: 601238 / FRA: 02G / OTCMKTS: GNZUF / GNZUY) 🇨🇳 or GAC Group - Seven major sectors: R&D, vehicle, parts, energy & ecology, internationalization, commerce & transportation, investment & finance. 🇼 🏷️

• Price/Book (Most Recent Quarter): 0.25

• Forward P/E: 270.27 / Forward Annual Dividend Yield: 4.82% (Yahoo! Finance)