Analysts say it's time to buy these 10 beaten-down Chinese stocks

Published Thu, Dec 16 20218:31 PM ESTUpdated Thu, Dec 16 20219:46 PM EST

After a wild ride in 2021, some investors are turning more positive on Chinese stocks. It comes as valuations become more attractive, and amid the possibility that regulatory risks may be receding. Shares of Chinese companies have seen volatile swings this past year. Over $1 trillion in market capitalization have been wiped off Chinese companies , according to an estimate by Goldman Sachs. It comes as a series of regulatory actions by Beijing hit sectors from technology to real estate and education, and spooked investors. As investors look ahead to 2022, CNBC screened for the Chinese stocks in contraction territory that analysts like the most. Those stocks are listed either in Hong Kong or mainland China exchanges, and are down 10% or more from their 52-week highs. Here are the 10 Chinese stocks with the highest number of "buy" and "strong buy" ratings on Refinitiv, which compiles recommendations from analysts. Chinese internet giants Tencent and Alibaba , as well as food-delivery company Meituan , were on the list. All three companies were fined as a result of Beijing's regulatory crackdown. The list also includes electrical appliance manufacturer Midea Group and smartphone maker Xiaomi . Investment bank Jefferies said valuations for China's internet stocks have become attractive. "We have been underweight on the internet sector in 2021, but valuations are now attractive, and we believe that downgrades might be peaking," Jefferies analysts wrote in a note on Dec. 6. An underweight position reflects an investor's view that an asset is expected to underperform. Better outlook for A-shares The 2022 outlook for Chinese A-shares — or stocks listed on mainland exchanges — is expected to be better than their Hong Kong-listed counterparts, said Jie Lu, China head of investments at asset management firm Robeco. "We see policy shifting from regulatory tightening to supporting growth," Lu said in a webinar to discuss his outlook for China markets. Mainland markets are also less exposed to the internet sector compared with Hong Kong, said Lu. China's internet sector has been at the center of Beijing's regulatory crackdown. Robeco has remained invested in the sector, but with an underweight position, Lu said.

A Meituan food courier rides an electric bicycle along a road on March 29, 2021 in Handan, Hebei Province of China.

Jin Hua | Visual China Group | Getty Images

After a wild ride in 2021, some investors are turning more positive on Chinese stocks. It comes as valuations become more attractive, and amid the possibility that regulatory risks may be receding.