12 Best Asian Stocks To Buy Heading Into 2023

In this article, we discuss 12 best Asian stocks to buy heading into 2023.

On November 21, Citigroup became increasingly bullish on Chinese equities, upgrading Hong Kong to Overweight in Asia, noting that Beijing’s changes in Covid Zero policies should boost earnings. Similarly, the government’s support to elevate the property sector will support Chinese stocks as well. President Xi Jinping’s rigid policies have shifted, which has turned the market in New York and London bullish on Asia. Robert Buckland, a strategist at Citi, wrote in a note on November 20:

“Reopening — along with support for the property sector — should help stabilize the current China EPS downturn and support investor sentiment. China could offer an attractive domestic-driven recovery story even as other major economies are slowing sharply.”

Similarly, Morgan Stanley, which has been cautious about the Asian region for most of this year, raised its estimates for China’s stocks last week, forecasting the MSCI China Index to rally 14% by the conclusion of next year. Bank of America has also become optimistic about China, where some primary equity gauges lost more than a third of their value this year through October, making them the world’s biggest losers.

JPMorgan Chase moved even quicker than the other Wall Street experts, naming the Chinese market downturn a buying opportunity in late October. This is a massive shift from JPMorgan’s “uninvestable” tag for Chinese internet firms at the beginning of 2022. Some of the best Chinese stocks to buy for 2023 include Alibaba Group Holding Limited (NYSE:BABA), JD.com, Inc. (NASDAQ:JD), and Pinduoduo Inc. (NASDAQ:PDD). 

Our Methodology 

We selected the following Chinese stocks based on positive analyst coverage, strong business fundamentals, and future growth prospects. We have assessed the hedge fund sentiment from Insider Monkey’s database of 920 elite hedge funds tracked as of the end of the third quarter of 2022. 

Photo by buian_photos on Unsplash

Best Asian Stocks To Buy Heading into 2023

12. Tencent Music Entertainment Group (NYSE:TME)

Number of Hedge Fund Holders: 17

Tencent Music Entertainment Group (NYSE:TME) is headquartered in Shenzhen, China, and it operates online music entertainment platforms to provide music streaming, online karaoke, and live streaming services in the People’s Republic of China. On November 15, Tencent Music Entertainment Group (NYSE:TME) reported a Q3 non-GAAP EPADS of $0.12 and a revenue of $1.04 billion, outperforming Wall Street estimates by $0.02 and $49.33 million, respectively. Gross margin for the third quarter of 2022 rose by 3.0% to 32.6% from 29.6% in the same period of 2021.

On November 22, JPMorgan analyst Alex Yao upgraded Tencent Music Entertainment Group (NYSE:TME) to Overweight from Neutral with a price target of $7.70, up from $4.80. The analyst noted that online music “has finally become a key financial driver” for the company, given a “multi-dimensional monetization model and efficiency improvement.” The analyst now forecasts Tencent Music Entertainment Group (NYSE:TME) to report mid-to-high double-digit earnings growth in the next three quarters. 

According to Insider Monkey’s data, 17 hedge funds were long Tencent Music Entertainment Group (NYSE:TME) at the end of Q3 2022, compared to 14 funds in the prior quarter. John Overdeck and David Siegel’s Two Sigma Advisors is the largest stakeholder of the company, with 6.5 million shares worth $26.5 million. 

Like Alibaba Group Holding Limited (NYSE:BABA), JD.com, Inc. (NASDAQ:JD), and Pinduoduo Inc. (NASDAQ:PDD), Tencent Music Entertainment Group (NYSE:TME) is one of the best Asian stocks to buy heading into 2023. 

Bireme Capital made the following comment about Tencent Music Entertainment Group (NYSE:TME) in its Q3 2022 investor letter:

“We made a few material trades in the quarter. First, we sold our stake in Tencent Music Entertainment Group (NYSE:TME), which we wrote about in our “CIO Corner” newsletter.

We sold our stake primarily because of the massive underperformance of TME’s “Social Entertainment” segment. That portion of the business, which operates primarily through a group karaoke app called WeSing, lost 27% of its users during the year that we owned the stock. This seems to have been caused primarily by competition from other streaming platforms, such as TikTok (Douyin in China), a risk which we underestimated. Since this segment produces essentially all of TME’s profits, the loss of users had a dramatic impact on our valuation of the business.

Secondarily, we had expected growth of Average Revenue Per User (ARPU) in their music subscription business, in which TME has 70% share in China. Despite this near monopoly, competition from upstart NetEase Cloud Music has been fierce. Over the last year, NetEase gained material market share by offering discounts of 15-20% off the standard 8 RMB monthly price. TME has been forced to respond in kind, and TME’s ARPU fell 11% YoY in the second quarter.

With users falling dramatically in Social Entertainment and ARPU growth in question in Online Music, there was simply nothing left to support our original bullish stance on the stock. Even the fall from $6 at the end of 2021 to $4 per share in July was not enough to compensate for this change in our assessed value, so we sold our position.”

11. Kanzhun Limited (NASDAQ:BZ)

Number of Hedge Fund Holders: 19

Kanzhun Limited (NASDAQ:BZ) is a Beijing-based company that operates an online recruitment platform, BOSS Zhipin, in the People’s Republic of China. Its recruitment platform facilitates the recruitment process between job candidates and employers. It is one of the best Chinese stocks to invest in. In the first week of November, Kanzhun Limited (NASDAQ:BZ) stock jumped from the decliners list to land the top spot among the week’s winners. 

On November 14, Goldman Sachs analyst Timothy Zhao upgraded Kanzhun Limited (NASDAQ:BZ) to Buy from Neutral but trimmed the price target to $23 from $27.50. Kanzhun Limited (NASDAQ:BZ) owns China’s biggest online recruitment platform, Boss Zhipin, and the analyst believes the company reached an inflection point in Q3. He forecasts accelerating revenue growth and a sequential cash billings increase over the next 12-18 months.

According to Insider Monkey’s Q3 data, 19 hedge funds were long Kanzhun Limited (NASDAQ:BZ), compared to 25 funds in the earlier quarter. Chase Coleman’s Tiger Global Management is the largest stakeholder of the company, with 17.8 million shares worth close to $301 million. 

10. Li Auto Inc. (NASDAQ:LI)

Number of Hedge Fund Holders: 20

Li Auto Inc. (NASDAQ:LI) was founded in 2015 and is headquartered in Beijing, China. The company designs, develops, manufactures, and commercializes new energy vehicles in the People’s Republic of China. On November 1, Li Auto Inc. (NASDAQ:LI) announced that it has delivered 10,052 vehicles in October 2022, up 31.4% year-over-year. The cumulative deliveries of Li Auto vehicles reached 221,067 as of the end of October.

On October 28, Barclays analyst Jiong Shao maintained an Overweight rating on Li Auto Inc. (NASDAQ:LI) but lowered the price target on the shares to $25 from $40. The analyst updated estimates and 12-month price targets for all the Chinese tech and internet companies under the firm’s observation heading into year-end 2022.

According to Insider Monkey’s third quarter database, Li Auto Inc. (NASDAQ:LI) was part of 20 hedge fund portfolios, compared to 28 in the prior quarter. Jim Simons’ Renaissance Technologies is the largest stakeholder of the company, with 12.4 million shares worth $285.7 million. 

9. NetEase, Inc. (NASDAQ:NTES)

Number of Hedge Fund Holders: 24

NetEase, Inc. (NASDAQ:NTES) is headquartered in Hangzhou, China, and the company provides online services consisting of diverse content, community, communication, and commerce in the Peoples’ Republic of China and internationally. The company operates through Online Game Services, Youdao, Cloud Music, and Innovative Businesses and Others segments. NetEase, Inc. (NASDAQ:NTES) is one of the best Chinese stocks to consider. On November 17, NetEase, Inc. (NASDAQ:NTES) reported a Q3 non-GAAP EPADS of $1.61, which outperformed Wall Street estimates by $0.56. The gross profit was $1.9 billion, an increase of 16.4% compared to the third quarter of 2021.

On November 18, Citi analyst Alicia Yap raised the price target on NetEase, Inc. (NASDAQ:NTES) to $100 from $98 and kept a Buy rating on the shares. The company reported “solid” Q3 results and has strong self-development capability and cash flow generation, the analyst told investors in a research note.

According to Insider Monkey’s data, 24 hedge funds were bullish on NetEase, Inc. (NASDAQ:NTES) at the end of September 2022, compared to 26 funds in the prior quarter. William B. Gray’s Orbis Investment Management is the largest stakeholder of the company, with 3.6 million shares worth $274.6 million. 

8. ZTO Express (Cayman) Inc. (NYSE:ZTO)

Number of Hedge Fund Holders: 24

ZTO Express (Cayman) Inc. (NYSE:ZTO) is a Shanghai-based provider of express delivery and other value-added logistics services in the People’s Republic of China, serving e-commerce and traditional merchants. On November 17, ZTO Express (Cayman) Inc. (NYSE:ZTO) announced that it will pursue voluntary conversion to dual-primary listing on the Main Board of the Hong Kong Stock Exchange.

On November 21, ZTO Express (Cayman) Inc. (NYSE:ZTO) announced that its board of directors authorized the increase in its share repurchase program to $1.5 billion from $1 billion. The company also stretched the time of the share buyback by one year until June 30, 2024. 

HSBC analyst Parash Jain on November 23 maintained a Buy recommendation on ZTO Express (Cayman) Inc. (NYSE:ZTO) but trimmed the price target on the shares to $33 from $36. Despite COVID-19 constraints, ZTO Express (Cayman) Inc. (NYSE:ZTO) experienced quicker volume growth in Q3 and also reiterated higher EBIT per parcel versus peers, supported by its economies of scale and better service quality, though volume guidance for 2022 was lowered due to the disruptions, the analyst wrote in a research note.

According to the third quarter database of Insider Monkey, 24 hedge funds were long ZTO Express (Cayman) Inc. (NYSE:ZTO), compared to 17 funds in the prior quarter. Kerr Neilson’s Platinum Asset Management is the largest stakeholder of the company, with nearly 16 million shares worth $382.4 million. 

7. H World Group Limited (NASDAQ:HTHT)

Number of Hedge Fund Holders: 29

H World Group Limited (NASDAQ:HTHT) is one of the best Chinese stocks to monitor. It is a Shanghai-based company that develops leased, owned, and franchised hotels primarily in the People’s Republic of China. On October 25, H World Group Limited (NASDAQ:HTHT) reported that third quarter’s revenue per available room (RevPAR) rebounded to 90% of the 2019 level in Legacy-Huazhu business due to the pent-up leisure traveling demand in the summer holidays.

On October 27, Daiwa analyst Carlton Lai upgraded H World Group Limited (NASDAQ:HTHT) to Buy from Outperform with a price target of $34, down from $43. The analyst sees a “compelling valuation” after the latest share price correction. He believes the present share price reflects limited improvement in China’s 2023 RevPAR, but his base case remains that China will see a gradual reopening beginning in mid-2023.

According to Insider Monkey’s data, 29 hedge funds were bullish on H World Group Limited (NASDAQ:HTHT) at the end of September 2022, compared to 30 funds in the prior quarter. 

6. KE Holdings Inc. (NYSE:BEKE)

Number of Hedge Fund Holders: 41

KE Holdings Inc. (NYSE:BEKE) is a Beijing-based company that focuses on operating an integrated online and offline platform for housing transactions and services in the People’s Republic of China. The company operates through three segments – Existing Home Transaction Services, New Home Transaction Services, and Emerging and Other Services. 

On October 28, investment advisory Barclays raised the firm’s price target on the shares to $27 from $26 and kept an Overweight rating on the shares. Analyst Jiong Shao issued the ratings update. 

According to Insider Monkey’s Q3 data, 41 hedge funds were long KE Holdings Inc. (NYSE:BEKE), compared to 37 funds in the prior quarter. The collective stakes in Q3 increased to $1.65 billion from $1.62 billion in Q2 2022. 

In addition to Alibaba Group Holding Limited (NYSE:BABA), JD.com, Inc. (NASDAQ:JD), and Pinduoduo Inc. (NASDAQ:PDD), KE Holdings Inc. (NYSE:BEKE) is one of the most significant Chinese stocks to buy and hold for next year. 

Here is what Tao Value has to say about KE Holdings Inc. (NYSE:BEKE) in its Q3 2021 investor letter:

“As witnessed in the past quarter, the government intervention in the Chinese private sector is elevated to an unprecedented level. Given this background, I thoroughly reviewed all our Chinese holdings and made a few changes. We exited KE holdings (ticker: BEKE), for high potential regulatory risk and the passing of the visionary founder & CEO Zuo Hui (who was a core tenet of our original thesis).”

5. Trip.com Group Limited (NASDAQ:TCOM)

Number of Hedge Fund Holders: 42

Trip.com Group Limited (NASDAQ:TCOM) is a Shanghai-based company that operates as a travel service provider for accommodation, transportation ticketing, packaged tours, corporate travel management, and other travel-related services in China and internationally. Trip.com Group Limited (NASDAQ:TCOM) is one of the best Chinese stocks to monitor. 

Barclays analyst Jiong Shao on October 28 maintained an Overweight rating on Trip.com Group Limited (NASDAQ:TCOM) but slashed the price target on the stock to $30 from $35. The analyst refreshed estimates and 12-month price targets for all the Chinese tech and internet companies under coverage heading into year-end 2022.

According to Insider Monkey’s data, 42 hedge funds were long Trip.com Group Limited (NASDAQ:TCOM) at the end of the third quarter of 2022, compared to 34 funds in the last quarter. Richard S. Pzena’s Pzena Investment Management is the largest position holder in the company, with a stake worth $278 million. 

Here is what Artisan Partners specifically said about Trip.com Group Limited (NASDAQ:TCOM) in its Q2 2022 investor letter:

“Trip.com Group Limited (NASDAQ:TCOM) is China’s leading online travel agent or OTA. Prior to the pandemic, Trip.com was a profitable business with a large competitive advantage built around its position in both inbound and outbound international travel. That advantage was based on considerable investment in support centers, a large sales force outside of China focused on hotel supply agreements, partnerships with Chinese language tour providers, and other services to support the Chinese traveler. Trip.com was a healthy and growing business—the number of Chinese outbound tourists grew to 155 million (larger than the population of Japan) in 2019 from just 57 million in 2010. As it did with so many travel entities, the pandemic upended the business, and Chinese outbound tourists in 2021 fell to just under 26 million, devastating the company’s profits and the share price, which fell from the high 30s to the low 20s.

Generally speaking, OTAs are great businesses. Effectively, these companies take a commission for booking travel for providers. In addition, an OTAs app attracts advertising revenue from airlines, hotels, and other tourist destinations. Trip.com’s appeal is enhanced by a management team thoughtful enough to operate with significant net cash on the balance sheet.”

4. Baidu, Inc. (NASDAQ:BIDU)

Number of Hedge Fund Holders: 43

Baidu, Inc. (NASDAQ:BIDU) was incorporated in 2000 and is headquartered in Beijing, China. The company offers internet search services in China, operating through Baidu Core and iQIYI segments. Baidu, Inc. (NASDAQ:BIDU) is one of the premier Chinese stocks to invest in. 

On November 22, Baidu, Inc. (NASDAQ:BIDU) reported a Q3 non-GAAP EPADS of $2.37 and a revenue of $4.57 billion, outperforming Wall Street estimates by $0.17 and $100 million, respectively. The company also announced that it had received approval to test driverless vehicles in Beijing.

Morgan Stanley analyst Gary Yu on November 23 maintained an Equal Weight rating on Baidu, Inc. (NASDAQ:BIDU) but lowered the price target on the shares to $120 from $140. Following the company’s Q3 report, the analyst kept his revenue forecasts “largely unchanged,” but somewhat lifted Baidu, Inc. (NASDAQ:BIDU)’s core non-GAAP operating profit forecasts for 2022/23 to factor in margin improvement while slashing his target given the latest sector-wide de-rating.

According to Insider Monkey’s Q3 data, 43 hedge funds were bullish on Baidu, Inc. (NASDAQ:BIDU), compared to 45 funds in the prior quarter. John W. Rogers’ Ariel Investments is the biggest stakeholder of the company, with 2.60 million shares worth $305.6 million. 

Baron Funds made the following comment about Baidu, Inc. (NASDAQ:BIDU) in its Q3 2022 investor letter:

“As part of our digitization theme, we reiterate our conviction in Baidu, Inc. (NASDAQ:BIDU) and InPost S.A. Baidu is a leading Chinese artificial intelligence company, which, in our view, is trading well below intrinsic value due to short-term economic and geopolitical uncertainties. We expect significant long-term upside given the company’s strong competitive position across several of China’s key growth industries. Baidu’s mobile ecosystem, which includes China’s dominant search engine, has over 620 million monthly active users. In our view, this ecosystem will benefit from the secular growth of China’s digital advertising industry, as well as the expansion of searchable content from established social media and e-commerce platforms resulting from recent regulatory reforms regarding data interoperability. Beyond its core search business, Baidu has invested heavily in cutting-edge technologies including cloud, autonomous driving, smart devices, and AI semiconductor chips. The company’s cloud business is one of the largest and fastest growing in China and is differentiated by its AI solutions and higher-value PaaS/SaaS offerings. Baidu has also developed leading autonomous driving technologies that it is commercializing through partnerships with top-tier Chinese auto manufacturers. We expect the company to sustain solid double-digit earnings growth over the next three to five years.”

3. Pinduoduo Inc. (NASDAQ:PDD)

Number of Hedge Fund Holders: 54

Pinduoduo Inc. (NASDAQ:PDD) is one of the top Chinese stocks to monitor. The company operates an e-commerce platform in the People’s Republic of China. On October 28, Morgan Stanley analyst Eddy Wang reiterated an Equal Weight rating and a $65 price target on Pinduoduo Inc. (NASDAQ:PDD) ahead of the company’s Q3 report in November. The analyst believes Pinduoduo Inc. (NASDAQ:PDD)’s Q3 OMS revenue growth could be the next share price catalyst, and expects Pinduoduo’s Q3 OMS revenue to achieve nearly 40% growth year-over-year. The analyst noted that this growth figure would suggest 20%-25% GMV growth.

According to Insider Monkey’s third quarter database, 54 hedge funds were long Pinduoduo Inc. (NASDAQ:PDD), compared to 41 funds in the prior quarter. Rajiv Jain’s GQG Partners is the largest stakeholder of the company, with 5.20 million shares valued at $326 million. 

Here is what Tao Value has to say about Pinduoduo Inc. (NASDAQ:PDD) in its Q4 2021 investor letter:

“On the detracting side, one of our largest detractors includes Pinduoduo (ticker: PDD). Pinduoduo (PDD) reported the second consecutive GAAP profit quarter yet missed on the revenue due to nation-wide consumption weakness & scaled back Sales & Marketing efforts. Market disliked it and the stock price plunged on the earnings. In my opinion, the accounting profits proved the original thesis of using S&M to acquire users and using great shopping experience to keep them. After realizing the first growth curve, Pinduoduo now shifted its focus & investment to agriculture. It is still very early, but the reduced size due to price drop warrants a position to watch and continue to grow with such a team with a strong culture.”

2. JD.com, Inc. (NASDAQ:JD)

Number of Hedge Fund Holders: 67

JD.com, Inc. (NASDAQ:JD) is a Beijing-based company that provides supply chain-based technologies and services in the People’s Republic of China. The company offers computers, communication, consumer electronics products, home appliances, general merchandise products, and healthcare products on its platform. JD.com, Inc. (NASDAQ:JD)’s annual active customer accounts increased by 6.5% to 588.3 million in the twelve months ended September 30, 2022.

On November 21, Citi analyst Alicia Yap raised the price target on JD.com, Inc. (NASDAQ:JD) to $90 from $85 and maintained a Buy rating on the shares following the Q3 beat. Management conveyed that the better profitability achieved through efficiency and lower costs will be sustainable, the analyst wrote in a research note. She believes JD.com, Inc. (NASDAQ:JD) remains well positioned to capture fast growth in revenue and active user count once the pandemic is over.

According to Insider Monkey’s data, 67 hedge funds were bullish on JD.com, Inc. (NASDAQ:JD) at the end of September 2022, compared to 62 funds in the prior quarter. Chase Coleman’s Tiger Global Management is the biggest stakeholder of the company, with approximately 30 million shares worth $1.50 billion. 

Here is what Argosy Investors has to say about JD.com, Inc. (NASDAQ:JD) in its Q3 2021 investor letter:

“We sold JD as a result of the furor over Chinese stocks during the quarter. We had been concerned about China’s lack of respect for investor rights for some time, and Beijing has become significantly more aggressive in asserting itself of late. In addition, the legal structure Chinese companies use to come public in the U.S., a Cayman Islands shell corporation leaves American investors with an unsure path to recovering value should these companies cease to trade on U.S. exchanges. Because of the uncertainty, we exited our position in JD completely. We still love JD’s long-term prospects, but we cannot estimate the legal/regulatory risk associated with these companies anymore. More broadly, we are freeing up cash for some other positions we already own which have declined in this market, and after additional review, remain attractive.”

1. Alibaba Group Holding Limited (NYSE:BABA)

Number of Hedge Fund Holders: 105

Alibaba Group Holding Limited (NYSE:BABA), the Chinese e-commerce and technology conglomerate, is one of the best Asian stocks to buy heading into 2023. For the September quarter of 2022, the company reported a non-GAAP EPADS of $1.82, beating market estimates by $0.17.

On November 18, Truist analyst Youssef Squali reiterated a Buy rating on Alibaba Group Holding Limited (NYSE:BABA) but lowered the price target on the shares to $120 from $125. The company’s Q2 results indicated that Alibaba Group Holding Limited (NYSE:BABA) is making solid strides in protecting margins while navigating a difficult macro environment, the analyst told investors. Near-term demand trends will potentially remain challenging, but he is encouraged by the stable high-value user count and traffic, the analyst added.

According to Insider Monkey’s Q3 data, 105 hedge funds were long Alibaba Group Holding Limited (NYSE:BABA), compared to 106 funds in the last quarter. David Blood and Al Gore’s Generation Investment Management is a prominent stakeholder of the company, with 4.50 million shares worth $360.7 million. 

Polen Capital made the following comment about Alibaba Group Holding Limited (NYSE:BABA) in its October investor letter:

“Alibaba Group Holding Limited (NYSE:BABA) is the leading e-commerce company in China. The stock was weak over the quarter as they reported a quarterly revenue decline. The company has been heavily impacted by the continued covid-19 lockdowns throughout China and the aggressive rate increases and deteriorating outlook for China’s economy have weighed heavily on the stock. The share price has also been under pressure due to the U.S. Securities and Exchange Commission’s plans to delist Chinese tech stocks in 2024 if they do not provide access to audit files.”

You can also take a look at 15 Biggest Data Mining Companies in the World and 12 Best Apparel Stocks To Buy Now. 

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Disclosure: None. 12 Best Asian Stocks To Buy Heading Into 2023 is originally published on Insider Monkey.