Chinese tech stocks topped the list of analysts' most loved stocks for 2021 despite crackdown

Published Thu, Dec 30 20216:31 PM EST

Chinese tech stocks were among top analyst picks in Asia for 2021, despite regulatory pressure casting a shadow on the country's tech giants. Tencent and Alibaba topped a list of analyst recommendations with an average of "buy" and "strong buy" ratings on Refinitiv, respectively. Meituan and Baidu also made the list. However, Chinese markets have been volatile this year. An estimate by Goldman Sachs earlier this year found that over $1 trillion in market capitalization had been wiped off Chinese companies . Beijing has slapped tech firms with new regulations and fines, in areas from antitrust for internet platforms to a bolstered data protection law . The hard-hitting measures have reflected in the prices of Chinese stocks. Hong Kong's Hang Seng index has plummeted nearly 15% so far this year, while the CSI 300, which comprises of the largest 300 stocks traded on the mainland, has fallen about 5% year to date. Other stocks that dominated analysts' most recommended list included banks in India. Taiwan's TSMC also made the cut as a global chip shortage drove up prices for semiconductors. As investors look back on the year, here are the top stocks in Asia with the greatest number of analyst recommendations, with an average recommendation of "buy" and "strong buy" ratings on Refinitiv. Cautious on Asian stocks in 2022 As the year comes to an end, analysts said they are cautious on Asian stocks in 2022. Rising inflation, the supply chain crisis and China's continued zero-Covid approach are among risk factors for Asian markets that analysts are watching. Morgan Stanley said in its 2022 outlook report that it remains cautious on both emerging market and China stocks as it looks for a "clearer signal" on Chinese stimulus policies as well as the trajectory of monetary policy tightening globally. The Fed has indicated it sees three rate hikes in 2022 , which would mark an end to its ultra-easy policy run since the onset of the pandemic. The emergence of the omicron Covid variant has also increased uncertainty, while inflation will edge higher, Japanese bank Nomura noted. Stocks could pull back between 5% and 10% as markets weigh the inflationary pressure and monetary tightening, say Eastspring Investments. "The [emerging market] view is anchored less on the [emerging market] reopening trade, given China's continued pursuit of a zero COVID policy," it wrote. Investors in the year ahead will also be keeping an eye on Chinese stocks, given the volatility of this corner of the market in 2021. "Within [emerging markets], we expect pockets of attractive opportunities to dominate and one which we are watching closely is China tech versus US tech given the challenges the sector has faced in the past six to nine months," said Eastspring.

Chinese technology giants including Alibaba have seen slower-to-no-growth as China's economy faces weakness as a result of Beijing's zero-Covid policy.

Qilai Shen | Bloomberg | Getty Images

Chinese tech stocks were among top analyst picks in Asia for 2021, despite regulatory pressure casting a shadow on the country's tech giants.