Morgan Stanley analysts have picked some Chinese stocks they say are oversold and have a greater chance of rebounding after supportive comments from Chinese policymakers last week. That doesn't mean the investment bank is all-in on Chinese stocks yet. "We do not see a rush to turn outright bullish at the broad index level, and would like to see more signs of an exit strategy from the zero-Covid policy, easing of global geopolitical tension, and revival of the overseas IPO market, among others, for a sustainable rally," equity strategist Laura Wang and a team said in a recent note. "We believe it makes sense to look at stocks with strong fundamentals but that have been oversold lately," the analysts said. They screened their coverage of overweight-rated Chinese stocks for names that had seen the biggest declines relative to most analysts' earnings expectations from the close of March 3 to March 15. The full list of 38 Hong Kong and U.S.-listed oversold Chinese stocks only contained seven listed in the U.S. Major companies that didn't make the final list included Tencent, Alibaba, JD.com, Bilibili and Nio. Here are three U.S.-listed Chinese stocks from Morgan Stanley's screen: Joyy Joyy is a livestreaming and social media company that owns a number of video platforms whose livestreaming revenues come primarily from outside China. The company previously owned YY, an early player in China's livestreaming industry, which it sold to Chinese tech giant Baidu in early 2021. Joyy also sold most of its stake in video game livestreaming platform Huya to Tencent in 2020. Last week, Joyy said it swung to profit in the last three months of 2021. The company reported fourth-quarter diluted net income of 85 cents per share traded in the U.S., up from a loss of 5 cents a share in the same period a year earlier. Shares surged by 66% last Wednesday, alongside the rally in other U.S.-listed Chinese stocks. But Joyy shares remain nearly 8% lower year-to-date. Pinduoduo Shares of group buying e-commerce company Pinduoduo spiked 56% on Wednesday. The company has emerged in the last few years as a surprise rival to dominant Chinese e-commerce players Alibaba and JD.com. Pinduoduo attracted users with a social element that required customers to buy products in groups — with family, friends or strangers — in order to benefit from bulk order discounts. The company has focused increasingly on working with farmers and agriculture products. However, business growth has slowed in recent months. The app had 733.4 million monthly active users in the fourth quarter of 2021, down from 741.5 million the prior quarter, according to results released March 21. Total revenue for the quarter of 27.27 billion yuan ($4.25 billion) missed analysts' expectations of 30.10 billion yuan, according to Reuters. "Our revenue growth slowed down due to moderating user growth and fluctuation in user activity," Jun Liu, vice president of finance of Pinduoduo, said in a release. "At the same time, we recorded a profit in the fourth quarter, which is attributable to more controlled spending as we adjust to slower growth, and a one-off rebate from one of our service providers." Shares remain about 23% lower year-to-date as of Thursday's close. Huazhu Chinese hotel operator Huazhu operates a number of mid-tier domestic hotel brands such as Orange Hotel, and has co-development rights for Grand Mercure and Novotel in China. Earlier this year, the company announced December revenue per available room, an industry metric, recovered to 90% of that just before the pandemic began in 2020. But on Wednesday, Huazhu said the revenue metric for the fourth quarter overall was only 86% of what it was during the same period in 2019. "Unfortunately, the situation has not improved since March 2022 as the highly infectious Omicron variant has been spreading rapidly in China," Jin Hui, CEO of Huazhu, said in a release. "As China's 'zero-COVID' policy remains in place, these near-term uncertainties and fluctuations are inevitable. For our European business, it was impacted again by tightened governmental control measures and testing requirements due to the third and fourth waves of the COVID-19 pandemic in European countries." The company said for the full year of 2022, it expects year-on-year revenue growth of 15% to 20%. Shares climbed about 34% during last Wednesday's rally and have held steady since. The stock remains about 12% lower year-to-date. — CNBC's Michael Bloom contributed to this report.
Pinduoduo's Nasdaq listing ceremony, from Shanghai Tower on July 26, 2018.
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Morgan Stanley analysts have picked some Chinese stocks they say are oversold and have a greater chance of rebounding after supportive comments from Chinese policymakers last week.
That doesn't mean the investment bank is all-in on Chinese stocks yet.