The Chinese economy appears to be on the road to recovery.
China’s official GDP figures released Wednesday night showed that its economy grew 3.2% in the second quarter from a year earlier, recovering from a 6.8% contraction in the first quarter.
Chinese stocks are also taking off. Large-cap names in China as measured by the FXI ETF have risen 7% so far this month, about double the S&P 500 earnings.
Delano Saporu, founder of New Street Advisors, said one of those stocks is poised to make even more profit.
“I really believe in Alibaba,” Saporu told CNBC’s “Trading Nation” on Wednesday. “We are seeking isolation from broader macro-level events. And Alibaba provides that with its strong e-commerce strategy and we believe it can continue … We believe in maintaining that strength.”
Alibaba shares are up 14% this year, while FXI ETFs and S&P 500 remain negative. The stock hit a record high a week ago.
Mark Tepper, president of Strategic Wealth Partners, is optimistic about Chinese stocks in general. It owns the Chinese internet ETF KWEB to take advantage of the group’s strength.
“I think a lot of it [strength] it has to do with the Covid narrative. It is front and center here in the United States and people are afraid. You hardly hear about it in China and I’m not saying it’s not that bad there, I’m just saying you don’t hear about it, “he said during the same segment.
Tepper agrees with Saporu that Alibaba is best in class.
“There is no doubt that China’s middle class is growing and I think Alibaba really is the best way to play it. We own the company, not only for e-commerce, but also for cloud delivery, food and groceries. “said Tepper. “What you get with Alibaba is that you get a diversified play in a growing economy.”
He adds that Alibaba seems cheap compared to its American counterpart Amazon. Alibaba is trading at 26 times anticipated earnings; Amazon has a multiple of 102 times forward.
Disclosure: Strategic Wealth Partners owns Alibaba. New Street Advisors has Alibaba.
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