A few U.S.-listed China stocks doubled in 2023. Winners to watch
The top-performing U.S.-listed Chinese stocks for 2023 weren’t well-known internet names. Instead of Alibaba — down more than 10% for the year — it’s Temu parent PDD Holdings that outperformed with gains of nearly 80% for 2023 as of Thursday, according to Wind Information. But topping PDD were three stocks that basically doubled or more for the year: ACM Research , New Oriental Education and Ehang . As a semiconductor play with subsidiaries in China, ACM’s roughly 160% surge wasn’t that surprising in a year that saw Nvidia skyrocket by more than 200%. New Oriental’s resurgence following China’s afterschool crackdown was more of a comeback story, thanks in no small part to a livestreaming venture by the company’s underemployed teachers. The sales of products via livestreaming are largely conducted through New Oriental’s Hong Kong-listed subsidiary East Buy. New Oriental shares climbed 103% in 2023 as of Thursday, after a rocky December that saw its CEO take greater control of East Buy and support star livestreamer Dong Yuhui. What’s potentially more forward-looking is flying car company Ehang’s 99% surge in 2023, as of Thursday. Goldman Sachs upgraded the stock to buy in October after Ehang said its EH216-S became the first vehicle to receive the Chinese government’s approval to conduct fully autonomous flights with two human passengers inside. In late December Ehang said the vehicle obtained the government’s airworthiness certification, and is starting to deliver the human-carrying drones for tourism in China. What Ehang needs next for bigger commercial operation is a production certificate and airspace approval, Goldman Sachs analysts Allen Chang and a team said in a Dec. 27 note. “Recently, EHang also announced new strategic partnership with Wings Logistics Hub in United Arab Emirates, receiving up to 100 units in pre-orders for the EH216 Series, which is positive for EHang to expand its overseas market and obtain local certification,” the Goldman report said. The analysts have a price target of $30.50 a share, for another 79% upside from where Ehang closed Thursday at $17.06. Other 2023 outperformers among U.S.-listed Chinese stocks are retailer Miniso, up by about 90%, electric car company Li Auto with roughly 80% in gains and Hollysys Automation Technologies with an increase of around 60%. While multinationals consider supply chain diversification plans, Chinese authorities have emphasized they want to develop advanced manufacturing at home. Hollysys closed Thursday at $26.50 a share, exactly the price at which Ascendent Capital Partners is set to buy the industrial automation systems company, according to a Dec. 11 announcement. A few days later Shanghai-based ZKH Group, which operates an e-commerce platform for industrial parts, raised $62 million in a Nasdaq listing that valued the company at $2.5 billion. ZKH is still operating at a net loss, but said it is building a factory to manufacture automation-related products in China. Shares closed Thursday mildly higher than the $15.50 offering price. Overall market struggled Individual stock gains contrast with a steep decline for Chinese stocks overall. Most notably, in Hong Kong, the Hang Seng Index lost nearly 14% for the year, amid uncertainty about China’s worsening property market troubles and economic outlook. China’s stringent regulatory stance on gaming and education remain unchanged, as evidenced by a pre-Christmas release of surprisingly harsh draft rules on gaming. Still, Beijing is trying to send more market-friendly signals , and changes to final regulation on artificial intelligence this summer indicate support for innovation. Tensions with the U.S. have also eased. However, dour investor sentiment remained the story for the tech-heavy mainland Chinese stock indexes, the CSI 300 and Star 50, which dropped by more than 11% in 2023, according to Wind Information data. The broader Shanghai composite lost 3.7% for the year. The outperforming mainland Chinese stock index was the Beijing Stock Exchange 50 Index, up by about 15% in 2023, according to Wind. While the relatively new Beijing exchange is one to watch in coming months, it’s still largely inaccessible to international investors and may be benefitting from a surge of domestic interest simply because it was launched only about two years ago.