The best Chinese internet stocks could be some of the worst this year, according to Citi
Driver for Ele.me owned by Meituan and Alibaba on their way to deliver items to customers in Guangzhou, China.
Arjun Kharpal | CNBC
According to the chief investment officer of Citi Global Wealth, some of the worst Chinese internet stocks today are the ones with the best value.
These Chinese internet companies have tremendous potential given the size of their markets and opportunities in these regions, said David Bailin, who is also the company’s global investment director.
“If you compare some of these companies to comparable American tech companies, they are far cheaper. Their addressable market is far larger and the real impact they could have – due to the lack of a lot of normal and retail infrastructure – is quite extraordinary,” said Bailin on CNBC’s “Squawk Box Asia” on Tuesday.
“Some of the worst-performing stocks are now becoming the best,” he added.
Chinese tech giants Alibaba, Xiaomi and Meituan have all been hammered this year. Their Hong Kong-listed shares fell 10.7%, 19.9% and 11.7%, respectively, since the start of the year.
Bailin said this is an area his company wants customers to expand their portfolio in.
“We really like them and I think we’ll be expanding them in the next month or two,” he said.
The regulatory overhang has weighed on these stocks, but Bailin stated that Beijing is not trying to overthrow these companies.
“The risk is clear, the regulatory risk, but again these are companies that the Chinese government does not want to damage, but wants to regulate, and there is a wide gap between the two,” said Bailin.
The Chinese government has taken action against its tech giants, which have been largely burdened by regulations in recent years.
In February, China issued revised antitrust rules for so-called “platform economy” companies, a broad term for Internet companies that offer a variety of services from e-commerce to grocery delivery.