2 Ways to Buy the Dip as Chinese Stock Market Rally Cools Off

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Ishares China Large-Cap ETF Nouvelles

Alibaba Group Holdings Ltd ADR

Stocks Analysis by MarketBeat.com (Ryan Hasson) covering: iShares China Large-Cap ETF, Alibaba Group Holdings Ltd ADR. Read MarketBeat.com (Ryan Hasson)'s latest article on Investing.com

Chinese stocks surged on government stimulus and mortgage rate cuts but have recently pulled back, raising questions about buying opportunities.The iShares China Large-Cap ETF offers diversified exposure and appears well-positioned after a measured 15% pullback from recent highs.

Adding to the bullish sentiment, the People’s Bank of China announced that banks would lower mortgage rates for existing home loans by the end of October. Recent economic data has also contributed to the optimism, with China's Q3 GDP expanding by 4.9% year-over-year, surpassing analyst expectations and signaling that the government's interventions are beginning to bear fruit.) posted gains of 32% and 56%, respectively.

From a valuation perspective, despite its recent surge, Alibaba remains attractive with a forward P/E ratio of 11.17, reflecting both value and growth potential. Its recent pullback of almost 15% from its 52-week high offers an appealing dip buy opportunity. If the stock can continue to find support near the all-important $100 mark, a higher low and continuation to the upside might shape up.

Technically, FXI remains in a bullish trend, having broken out from its 52-week lows in September. The ETF has pulled back approximately 15% from recent highs, but this measured correction, retracing about half of its breakout move, could present a strategic buying opportunity. With the ETF finding support in the low $30s and continuing to attract strong inflows, FXI appears well-positioned for investors seeking broad exposure to China’s recovery.

 

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