10 Stocks to Buy As Virus Restrictions Are Lifted in China

Published June 13, 2022 at 9:02 am EDT Updated August 19, 2026 at 8:00 am EDT

In this article, we discuss 10 stocks to buy as virus restrictions are lifted in China.

In early June, the Chinese government approved at least 60 new video game licenses. The approval triggered a series of positive developments in the technology sector of the country, with the Hang Seng Tech Index jumping close to 5% amid a broad rally in the prices of prominent Chinese stocks like Alibaba Group Holding Limited (NYSE:BABA), Baidu, Inc. (NASDAQ:BIDU), and NIO Inc. (NYSE:NIO). The approvals were important since they indicated that a year-long crackdown by Beijing against dual-listed companies was nearing an end.

In the past twelve months, this crackdown has wiped nearly $2 trillion in market capitalization from the technology sector in China. Last year, Beijing had imposed strict restrictions on video games amid broad-reaching measures designed to “curb addiction” among young adults. Chinese tech IPOs, which had raised billions in blockbuster debuts on the US market, had also stopped during the crackdown. As restrictions ease, the market has been boosted by reports that these IPOs may soon resume as well.

Analysts Turn Positive on China Tech Sector, Citizens Brace for “New Start”

Even though the Hang Seng Tech Index has climbed nearly 40% from its lows in March, it is still nearly 51% below the highs it reached in 2021 before the crackdown began. Analysts have been upgrading their forecasts on China as well. Per news platform Bloomberg, Ayaz Ebrahim, a portfolio manager at investment bank JPMorgan, has claimed that investors can “get more juice out of China” in the coming six-month period. Winnie Wu, a China equity strategist at Bank of America Securities, has also predicted a broad rally in the internet sector during the period.

The broad rally in Chinese tech stocks has also helped growth investors that were being battered due to rising inflation and interest rates in the US. The easing of virus-related restrictions in China since late May as coronavirus cases decline is also helping fuel the positivity around Chinese stocks. On May 31, Yin Xin, a spokesperson for the municipal government in Shanghai, told state-sponsored Global Times the city was embracing a “new start” and the daily briefing on the coronavirus would no longer take place.

Our Methodology

The companies that are best positioned to rise as virus restrictions are lifted in China were selected for the list. The firms that have registered an increase of at least 7% in their share price over the past month were preferred for the list. The business fundamentals and analyst ratings of these firms are also discussed to provide further context. An extensive database of around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to identify the popularity of each stock among hedge funds.

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Stocks to Buy As Virus Restrictions Are Lifted in China

10. Lufax Holding Ltd (NYSE:LU)

Number of Hedge Fund Holders: 12

Increase in Share Price Over Past Month: 7.91%

Lufax Holding Ltd (NYSE:LU) provides tech-based finance services. On May 24, the company posted earnings for the first quarter of 2022, reporting earnings per share of $0.34, beating market estimates by $0.03. The revenue over the period was $2.73 billion, up more than 17% compared to the revenue over the same period last year and surpassing market estimates by $150 million. In March, the company had declared an annual dividend of $0.68 per share. The forward yield was 12.12%.

On May 9, investment advisory CCIC initiated coverage of Lufax Holding Ltd stock with an Outperform rating and a price target of $7.80. CLSA analyst Hans Fan also has an Outperform rating on the stock with a price target of $6.80.

At the end of the first quarter of 2022, 12 hedge funds in the database of Insider Monkey held stakes worth $222 million in Lufax Holding Ltd, compared to 22 the preceding quarter worth $244 million.

Just like Alibaba Group Holding Limited, Baidu, Inc., and NIO Inc., Lufax Holding Ltd is one of the stocks that elite investors are monitoring as China eases lockdowns.

9. XPeng Inc. (NYSE:XPEV)

Number of Hedge Fund Holders: 26

Increase in Share Price Over Past Month: 13.10%

XPeng Inc. (NYSE:XPEV) makes and sells electric vehicles. On June 1, the company announced electric vehicle delivery results for May, reporting that it had delivered 10,125 smart EVs in the period, up more than 78% compared to the deliveries for May 2021. The May 2022 number was also up over 12% compared to the deliveries for April 2022. At the end of May, the firm said that the year-to-date deliveries had reached 53,688, an increase of more than 122% compared to the previous year.

On May 24, JPMorgan analyst Nick Lai maintained an Overweight rating on XPeng Inc. stock and lowered the price target to $35 from $42, predicting that the share price will follow a “V-shaped rebound in production and profitability” in the coming months.

At the end of the first quarter of 2022, 26 hedge funds in the database of Insider Monkey held stakes worth $783 million in XPeng Inc., compared to 29 in the preceding quarter worth $1.1 billion. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in XPeng Inc., with 13.7 million shares worth more than $378 million.

8. NetEase, Inc. (NASDAQ:NTES)

Number of Hedge Fund Holders: 29

Increase in Share Price Over Past Month: 14.27%

NetEase, Inc. (NASDAQ: NTES) provides interactive home entertainment services. On May 24, the company posted earnings for the first quarter of 2022, reporting earnings per share of $1.23 and a revenue of $3.7 billion. The gross profit over the period was $2,024 million, compared to RMB11,052 million in the first quarter of 2021. The gross profit for the fourth quarter of 2021 had been RMB11,052 million. The total cash and cash equivalents at the end of March 2022 were close to $17 billion, compared with RMB103 billion at the end of December 2021.

On May 16, JPMorgan analyst Alex Yao upgraded NetEase, Inc. stock to Overweight from Underweight and raised the price target to $120 from $60, noting that the uncertainties around the China tech sector were beginning to abate.

Among the hedge funds being tracked by Insider Monkey, Bermuda-based investment firm Orbis Investment Management is a leading shareholder in NetEase, Inc., with 6.4 million shares worth more than $577 million.

7. Dada Nexus Limited (NASDAQ:DADA)

Number of Hedge Fund Holders: 10

Increase in Share Price Over Past Month: 16.49%

Dada Nexus Limited (NASDAQ:DADA) provides retail and delivery services. The company recently reported a 60% year-on-year increase in revenue, excluding the impact of new rider arrangements, which indicates that the coronavirus-related drive to online shopping, which has become the new normal in China, looks likely to extend beyond the virus lockdowns. The quarterly results of the firm also show that the net loss for the company has narrowed, and profitability will likely increase in the months ahead.

On May 16, JPMorgan analyst Andre Chang upgraded Dada Nexus Limited stock to Overweight from Neutral and raised the price target to $10 from $7.50, backing the firm to be one of the early outperformers in China as a regulatory crackdown ends.

At the end of the first quarter of 2022, 10 hedge funds in the database of Insider Monkey held stakes worth $31 million in Dada Nexus Limited, compared to 15 in the preceding quarter worth $86 million.

6. Canaan Inc. (NASDAQ:CAN)

Number of Hedge Fund Holders: 7

Increase in Share Price Over Past Month: 21.10%

Canaan Inc. (NASDAQ:CAN) markets technology hardware, storage, and peripherals. The stock has climbed in the past few weeks after the company reported that it had resumed production and delivery of digital coin mining machines since March. The quarterly results of the firm were also in line with market estimates, with the firm reporting a revenue of $213 million. In guidance numbers for the second quarter, the company said that it expected net revenue to range from $252.4 million to $283.9 million against consensus estimates of $276.1 million.

On June 7, Benchmark analyst Michael Legg initiated coverage of Canaan Inc. stock with a Buy rating and a price target of $9, noting the firm was a large mining player and an indirect way of investing in the growth of Bitcoin.

At the end of the first quarter of 2022, 7 hedge funds in the database of Insider Monkey held stakes worth $8.8 million in Canaan Inc., compared to 8 in the preceding quarter worth $16 million. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Millennium Management is a leading shareholder in Canaan Inc., with 1.1 million shares worth more than $6.2 million.

In addition to Alibaba Group Holding Limited, Baidu, Inc., and NIO Inc., Canaan Inc. is one of the stocks that hedge funds have their eye on as China eases virus restrictions.

5. Baidu, Inc. (NASDAQ:BIDU)

Number of Hedge Fund Holders: 47

Increase in Share Price Over Past Month: 22.17%

Baidu, Inc. provides internet search services. The company posted earnings for the first quarter of 2022 in late May, reporting earnings per share of $1.77, beating market estimates by $0.94. The revenue over the period was close to $4.5 billion, up 1% compared to the revenue over the same period last year and beating market estimates by $320 million. The firm attributed the earnings beat to the “non-online ad business”, which registered a 35% year-over-year increase that was “driven by cloud and other AI-powered businesses”.

On May 31, Susquehanna analyst Shyam Patil maintained a Positive rating on Baidu, Inc. stock with a price target of $200, noting that the long-term view on the firm was unchanged despite near-term China uncertainties.

At the end of the first quarter of 2022, 47 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Baidu, Inc., compared to 38 in the preceding quarter worth $1.4 billion.

In its Q3 2021 investor letter, Ariel Investments, an asset management firm, highlighted a few stocks and Baidu, Inc. was one of them. Here is what the fund said:

“When we have such a high level of conviction for a company it is not uncommon for us to own it in size across our portfolios. Such is the case with technology giant Baidu, Inc., whose leading search engine has been dubbed the “Google of China.” This quarter shares sold off in sympathy with the Chinese internet sector as investors were rattled by the government’s sweeping regulatory crackdown intended to promote “common prosperity” by easing wealth inequality. While we recognize the greater political risk of investing in emerging markets such as China and incorporate an appropriately higher risk premium in the discount rate in our valuation models, we believe Baidu’s business strategy is aligned with national policies and priorities and is therefore not adversely impacted unlike some other players in the internet sector who are in the eye of the storm.

Indeed, the Chinese government recognizes Baidu’s large, upfront investments in many next-generation artificial intelligence (AI) technologies and hails it as a national champion. For example, the company’s Advanced Driving Support System (ADAS), Apollo, has twice as much data on miles driven than any other initiative in the world, giving Baidu (and China) a large lead in the global AI arms race. In addition, Baidu’s cloud offering touts highly differentiated Platform as a Service (PaaS) features and capabilities for a demanding enterprise customer base. While these initiatives are a temporary drag on margins and require long-term execution, their success will bolster China’s “dual circulation” strategy aimed at spurring domestic demand, innovation and self-reliance.” (Click here to see the full text)

4. Alibaba Group Holding Limited (NYSE:BABA)

Number of Hedge Fund Holders: 100

Increase in Share Price Over Past Month: 24.83%

Alibaba Group Holding Limited is a diversified technology company. On June 8, the stock climbed more than 10% in a single trading day after more approvals for video games licenses in China. The approvals, of which Alibaba is also a beneficiary, are the latest sign that the Chinese authorities are easing a regulatory crackdown that has haunted dual-listed tech firms in the country. The approvals also mean that the government in Beijing is now actively working to support the growth in the tech industry.

On May 31, Truist analyst Youssef Squali maintained a Buy rating on Alibaba Group Holding Limited stock and raised the price target to $145 from $132, noting that there were positive early signs for Chinese audit concessions amid US pressure.

Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited, with 14.4 million shares worth more than $1.5 billion.

In its Q1 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited was one of them. Here is what the fund said:

“We have eliminated 6 holdings during the first quarter (including) Alibaba Group Holding Limited. We have sold our Alibaba Group Holding Limited position as the company continues to face competitive challenges and regulatory pressures remain, making it difficult (if not impossible) to appropriately assess the range of outcomes and associated probabilities for the future profitability of the business.”

3. NIO Inc. (NYSE:NIO)

Number of Hedge Fund Holders: 26

Increase in Share Price Over Past Month: 26.76%

NIO Inc. makes and sells smart electric vehicles. On June 10, the company announced that it would start producing electric vehicle battery packs that it had developed in-house by the second half of 2024. The announcement marks a key milestone for the firm which is looking to compete with large EV makers in China and beyond. In the long-term, the firm plans to use a combination of self-produced and externally sourced batteries, a business model similar to the EV giant Tesla.

On June 12, Macquarie analyst Erica Chen maintained an Outperform rating on NIO Inc. stock and lowered the price target to $27.40 from $28.30, backing the market to appreciate the momentum trends of the company.

At the end of the first quarter of 2022, 26 hedge funds in the database of Insider Monkey held stakes worth $716 million in NIO Inc., compared to 30 in the preceding quarter worth $813 million.

2. Vipshop Holdings Limited (NYSE:VIPS)

Number of Hedge Fund Holders: 20

Increase in Share Price Over Past Month: 29.10%

Vipshop Holdings Limited (NYSE:VIPS) operates as an online discount retailer. On May 19, the firm posted earnings for the first quarter of 2022, reporting earnings per share of $0.33 and a revenue of around $4 billion. The revenue was up more than 11% compared to the revenue over the same period last year. In guidance numbers for the second quarter, the firm said it expected revenue to be around RMB22.2 billion and RMB23.7 billion, representing a year-over-year decrease rate of approximately 20%.

On March 14, JPMorgan analyst Andre Chang maintained a Neutral rating on Vipshop Holdings Limited stock and lowered the price target to $7 from $9, noting that the low valuation of the firm was making the share price more resilient than Chinese peers in the US.

At the end of the first quarter of 2022, 20 hedge funds in the database of Insider Monkey held stakes worth $389 million in Vipshop Holdings Limited, compared to 30 in the preceding quarter worth $329 million.

1. Futu Holdings Limited (NASDAQ:FUTU)

Number of Hedge Fund Holders: 11

Increase in Share Price Over Past Month: 44.61%

Futu Holdings Limited (NASDAQ:FUTU) provides wealth management services. On June 6, the firm posted earnings for the first quarter of 2022, reporting earnings per share of $0.49, beating market estimates by $0.07. The revenue over the period was $209 million, down close to 25% compared to the revenue over the same period last year but beating market estimates by more than $7 million. The total number of paying clients for the firm increased 67.9% year-over-year to 1.33 million at the end of March.

On June 10, Bank of America analyst Emma Xu upgraded Futu Holdings Limited stock to Buy from Underperform and raised the price target to $60.60 from $44.50, noting that the firm had multiple positive business developments ahead.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in Futu Holdings Limited, with 2.4 million shares worth more than $80 million.

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