Investing in China stocks

In particular, the Chinese search engine market share accounts for a large proportion of the overall stock market. China’s largest search engine is undoubtedly Baidu.com, which holds around 76% of all search revenue online. It is the second largest search engine in the world, after US tech giant Google. Baidu’s main rival in recent years is Qihoo 360 or 360 Search, whose visibility has rocketed and now claims a significant portion of the search engine market share.

Alibaba Group Holding Ltd is an online e-commerce retailer and China’s largest company by market capitalisation. The company controls more than 50% of China’s e-commerce market each year. Alibaba owns the websites of many subsectors: Taobao is the equivalent of second-hand C2C retail platform eBay, Alibaba Cloud is a cloud computing company, and Tmall is a B2C retailer for both Chinese and international businesses. Throughout the Great Recession, Alibaba managed to withstand the global stock market crash​ and revenue actually showed growth, possibly indicating that it is a stable and reliable stock for investment in times of economic hardship. Despite a drop in price at the start of 2020 due to shipment restrictions, the below chart shows that Alibaba’s share price​​ has been steadily increasing as the economy steadies.

Market cap: $593.7 billion

Share price: $266.80

JD is Alibaba’s main competitor within China’s e-commerce and retail sector, and it is the second-largest online retailer in the country, controlling around 17% of China’s e-commerce market each year. JD invests heavily into its logistic network and development of artificial intelligence, charging third-party companies for its services in robotics and driverless delivery vehicles. It is a very similar provider to the online retailer Amazon, as a Chinese pioneer of fast delivery and a never-ending range of products. Whereas Alibaba’s market share decreased due to restrictions on deliveries, JD controls its own distribution between buyers and sellers, therefore proving more reliable in the short-term. The chart below shows that JD’s share price​ has been rising consistently for the past year without any major drops.

Market cap: $94.6 billion

Share price: $94.22

Baidu Inc is the perfect example of a blue-chip stock. It is a technology and advertising company that specialises in internet services and artificial intelligence. The Baidu search engine is currently the fifth largest website in the world and the second largest search engine. As well as this, Baidu is a global leader for cloud storage services with Baidu Wangpan, smart speaker development and online mapping with Baidu Maps, an equivalent of Google Maps. The coronavirus pandemic has had a negative impact on the advertising industry in general, and Baidu’s share price took a large fall at the start of 2020. However, Chinese tech stocks are hoping that there will be a revival in internet-related services once the economy stabilises, and therefore, 2022 could be a great time to invest in Baidu's share price​​ and other similar companies.

Market cap: $42.5 billion

Share price: $259.91

NetEase Inc is a creative Chinese technology company that is a pioneer in the video gaming industry. The company provides content and communication services for developing desktop and mobile games. NetEase has also established a joint venture with Blizzard Entertainment, a US-owned video game developing company, in order to produce local versions of some of the most popular video games around the world. These include World of Warcraft, Hearthstone and StarCraft II. The company is in the process of creating their first virtual reality multiplayer online game, which is a huge opportunity to progress China’s tech industry. NetEase owns one of the leading companies within the e-learning sector in China, a spinoff called Youdao. This has shown success throughout 2020 due to schools closing as a reaction to the pandemic. As a result, NetEase’s share price​ is at an all-time high.

Market cap: $59.7 billion

Share price: $122.36

Weibo Corporation is a social networking company that specialises in microblogging. Its main Sina Weibo service share similarities with Twitter and Instagram, however, it is focused purely on entertainment, due to China’s strict censorship laws. Social media stocks can be difficult to invest in, as there are constant developments in social networking and often, websites that were once the height of popularity can disappear in replacement of new ones. However, Weibo’s share price​ is a bargain and can jump at the release of certain news and updates, so it is better to invest in this Chinese stock now, while it is at a cheap price.

Market cap: $7.6 billion

Share price: $49.49

Tencent Holdings Ltd is a conglomerate holding company within China’s tech industry. It is the world’s largest video game publisher and owns China’s top mobile messaging platform, WeChat. Tencent’s sudden growth could be attributed to the development of its own online payment service, WeChat Pay, which has an almost equal revenue in digital payments as Alibaba’s own service, Alipay. It also holds shares in Tencent Music Entertainment, a digital music service, and Tencent Cloud, which is the second largest cloud storage service in the country after Alibaba’s own. Although Tencent's share price experienced a slight drop at the start of the 2020, due to pressure on the advertising industry, it has since bounced back with the help of its video game stocks. Read more about Tencent stock.

Market cap: $639.1 billion

Share price: $736.25

Often referred to as the ‘Netflix of China’, iQIYI is one of the largest video streaming services in China. It was founded by Baidu, who currently owns a 56% stake in the company, and it is reported that Tencent are interested in purchasing a stake, which led to a surge in iQIYI’s share price​ upon news release. Given the rise of streaming stocks within recent years and especially throughout the pandemic, iQIYI is a safe option for investment. As shown in the below chart, the company experienced a plunge in stock price at the start of 2020 due to fraud allegations made against the company. However, it is rising steadily back to its previous figure, and the number of subscribers is around 105 million as of January 2021. This figure is almost double the reported figure from previous years, showing Netflix that iQIYI is a serious competitor.

Market cap: $18.5 billion

Share price: $23.36

Aside from spread betting and CFD trading on individual shares within the stock market, it is now possible to trade multiple assets at once with our innovative share baskets​. These are mini CFD portfolios of stocks that revolve around a specific theme, in this case, a ‘China Tech’ basket. Within this basket, the following Chinese tech companies are included:

An alternative method of gaining exposure to Chinese companies is through ETF trading​, where you also do not take direct ownership of the asset but instead trade on its price movements. Exchange-traded funds​ are investment funds that hold a collection of underlying assets within the share market. An index ETF is often used as a benchmark for other indices of a specific sector, such as China’s tech industry. Read more about exchange-traded funds.

Some of the top Chinese tech ETFs, in terms of index weighting, overall performance and included stocks, are the Global X MSCI China Information Technology ETF, Invesco China Technology ETF and KraneShares CSI China Internet Fund ETF. These all include a variety of the stocks featured in our China Tech share basket, including the China tech giants.