The big question in front of investors as we enter into the new year 2020 is which stocks to bet their money on. In EastMoneyStocks, we believe that not only micro-cap stocks that are able to provide good returns in shorter time, we believe tech stocks in China have been producing faster returns compared to the companies in the west. Here are 3 stocks that will continue to drive the Hong Kong equity market into greater heights.
#1 Tencent (0700.HK)
Tencent (700.HK) owns two of the largest social platforms in China. WeChat, the country’s most popular mobile messaging app, had 1.15 billion monthly active users (MAUs) last quarter. Its predecessor, the older messaging app QQ, had 731 million MAUs. The share price has caught analyst off guard by making new highs again during the last quarter of 2019.
Betting on Kuaishou’s growth
Tencent initially tried to counter TikTok by encouraging different teams to launch 15 short video apps. That scattershot strategy failed, and none of the apps gained meaningful ground against TikTok.
Tencent subsequently killed off most of those projects and focused on the growth of two apps: its older Weishi app and the newer Yoo Video, which was rebranded as Huoguo (Hotpot) Video. But last November, China merged Huoguo’s team into its larger video streaming platform Tencent Video — which indicated that the app’s days were numbered.
Instead of wasting more resources on TikTok clones, Tencent boosted its investments in TikTok’s main rival Kuaishou, which reaches over 360 million MAUs. Tencent reportedly invested another $2 billion in Kuaishou last December, which boosted the start-up’s valuation to a whopping $28 billion. Kuaishou also recently launched a new children’s app, Kuaishou Qingchunji, to lock in younger users.
#2 Alibaba (9988.HK)
Consumer spending in China sets Alibaba up for success
Alibaba going public on the Hong Kong market allows Mainland China investors, through the Hong Kong Stock Connect schemes, to access one of the most powerful e-commerce companies in the world. And this is a great thing, since Alibaba has had a phenomenal 2019 and still has room to grow.
The company just broke sales records on Single’s Day, the biggest shopping day in China, raking in over US$30 billion in gross value merchandise (GMV) in less than 24 hours. This marks a 26% increase over the prior year, far exceeding any numbers seen in the US.
This trend of Chinese consumer spending is set to continue. The disposable income of Chinese households tripled between 2010 and 2020. As a result, Alibaba is looking at more customers and more consumer spending. An IPO in Hong Kong will only help it expand its market, effectively growing its brand.
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#3 Meituan (3690.HK)
Meituan Dianping is jumping into China’s upstream food supply industry amid signals from central authorities that ensuring adequate availability following the African swine fever epizootic will be a major focus in 2020. Longzhu Capital, the investment subsidiary of online-to-offline services giant Meituan, was the sole financier in the first funding round of Guangdong Meat Union Fresh Holdings Co. Ltd., Meituan said in a statement.
New Partnership Signal New Opportunities
Meat Union is a food retail chain with about 500 locations in southern and eastern China whose founder runs an animal husbandry conglomerate. The company, Guangdong Yihao Foodstuff Co. Ltd., owns a 70% stake in Meat Union. Meituan did mention that it will collaborate on supply chains, products, store operations, online-to-offline services, tech investments and more.