Chinese internet tech companies Alibaba , Tencent and Baidu have reported solid quarterly earnings this month with little to show for it in market performance. Tencent has fallen for four weeks in a row. Alibaba and Baidu closed the week higher in U.S. trading after three straight weeks of declines – still not enough to recover losses of more than 10% for the month so far. All three stocks have double-digit gains ahead of them, if the average FactSet analyst price target holds true. Current sentiment isn’t helping. Worries about spillover from China’s worsening property market troubles in the absence of forceful stimulus are fueling headline uncertainty about future growth. But Gavekal’s CEO and founding partner Louis-Vincent Gave points out that even here, the market is telling a more moderate story, with Chinese bank stocks holding a positive 200-day moving average trend. “When we see bank shares break out to new lows, it is usually a signal that investors should head for the exit as quickly as possible,” he said, noting that was the case in 2007 to 2008 in the U.S., and in the 2010 to 2011 period in Europe. But Chinese bank stocks haven’t broken a low from October, while U.S. regional banks have had two massive sell-offs in the last five years, he said. Still, economists’ China GDP forecasts have come down. UBS analysts cut their estimate to around 4.8%, down from slightly above 5% previously. “We continue to expect property-related measures to be rolled out in the next few weeks, which would be crucial in reviving economic recovery and restoring market confidence,” the firm’s investment strategists said in a report Wednesday. “With an expected sequential recovery in fundamentals on the horizon, as well as a heightened sensitivity to any expected policy rollout, we continue to prefer the internet sector, especially e-commerce names, as a direct recovery beneficiary,” the UBS strategists said, noting the stocks are trading at low price-to-earnings multiples….
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