5 Stocks At Risk From Slowing Chinese Economy

4. NIKE, Inc. (NYSE:NKE)

Number of Hedge Fund Holders: 72 

NIKE, Inc. (NYSE:NKE) makes and sells athletic products. The company has strong exposure to the Chinese market and a slowdown in the Chinese economy will impact the 2025 targets of the firm. Increased competition from local brands, as well as a sharp drawdown in consumer spending across the world will further weigh on the shares of the firm. Inventory issues are also causing the firm to discount prices in the US, a move expected to pressure revenues of the firm in the near-term. 

On August 9, Exane BNP Paribas analyst Laurent Vasilescu downgraded NIKE, Inc. (NYSE:NKE) stock to Neutral from Outperform and lowered the price target to $118 from $151, noting that increased uncertainty in China would weigh on the stock in the near-term. 

Among the hedge funds being tracked by Insider Monkey, London-based investment firm Fundsmith LLP is a leading shareholder in NIKE, Inc. (NYSE:NKE) with 6.7 million shares worth more than $687 million.  

In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and NIKE, Inc. (NYSE:NKE) was one of them. Here is what the fund said:

“NIKE, Inc. (NYSE:NKE) is another play on e-commerce as well as the anticipated growth in consumer spending as we learn to live with COVID-19. After selling out of the stock in 2016 due to competitive concerns, we were motivated to repurchase shares because of optimism around a new management team’s focus on accelerating Nike’s shift toward e-commerce and direct-to-consumer (DTC) distribution. Near-term supply chain issues in Vietnam and retail weakness in China that we see as ephemeral provided a good buying opportunity. We do not believe the market is giving proper credit to Nike’s potential to deliver attractive, high-single-digit revenue growth while delivering operating margin expansion as more merchandise is sold direct. NIKE, Inc. (NYSE:NKE) is also still under-indexed to the women’s category, which we see as a significant ongoing catalyst.”