Alibaba, Tencent and Chinese tech stocks are good values with policy conditions priced in, Lombard Odier says

Name: Number of marriages drops in China as more young people say no
Uploaded: 2021-12-15T23:30:26.000Z
Duration: 1 min 51 s
Description: Number of marriages drops in China as more young people say no

Lombard Odier fund managers see values in beaten-down Chinese tech firms on optimistic outlook on online advertising revenue

The Swiss firm’s High Conviction funds in China and Asia count Alibaba and Tencent among their top 10 holdings

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Chinese technology stocks are great values for investors who can ignore short-term volatility to capture long-term growth, Lombard Odier says. Photo: Shutterstock

Cheryl Heng

Published: 7:30am, 16 Dec 2021Updated: 7:44am, 16 Dec 2021

A year-long regulatory crackdown on Chinese internet-platform operators has created opportunities for global investors to pick up stocks at the cheapest valuation in years, according to Lombard Odier Investment Managers.

The money manager sees the likes of Alibaba Group Holding, Tencent Holdings and Kuaishou Technology among likely winners as growth in online advertising revenue remains firm despite a slowdown in the world’s second-largest economy.

“Digital media in China is more in demand than anywhere else,” said Odile Lange-Broussy, who is the co-head of Asian and emerging markets equities based in Singapore. “Brands want to establish recognition and you need to advertise online to get to the younger generation. There certainly is a future for online advertising and all the platforms that channel that.”

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Number of marriages drops in China as more young people say no

China had the world’s largest mobile internet population of 873 million users in 2019, representing 23 per cent of such users globally, according to Kuaishou, based on industry data published by iResearch. This is expected to reach 1.1 billion by 2025, boosting the penetration rate to 78.5 per cent from 62.4 per cent.

The mobile advertising market rose to 542 billion yuan (US$85.1 billion) in 2019 from just under 100 billion yuan in 2015, according to iResearch forecast. The market could expand to 1.7 trillion yuan by 2025, it added.

“The online advertising sector has been under a lot of pressure [lately] but in the longer run, this is a very large market,” Lange-Broussy said in an interview with the Post on December 13. “At the moment, a number of companies in that sector have attractive valuations.”

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