10 Chinese Real Estate Stocks to Watch as Analysts Predict More Defaults and Crisis

In this article, we discuss 10 Chinese real estate stocks to watch as analysts predict more defaults and crises. If you want to read about some more Chinese real estate stocks to watch, go directly to 5 Chinese Real Estate Stocks to Watch as Analysts Predict More Defaults and Crisis.

Chinese real estate stocks boomed in the past two decades amid rapid modernization and development in the Asian country. However, as Beijing switches focus to quality and livability of life, new construction rules have come into effect, restricting the development of new skyscrapers. The property sector in China is also witnessing a slowdown in home sales, leading to a severe crisis as several big firms go into danger of default. Evergrande, one of the first to face default risk, has stalled construction in a bid to stay afloat. 

Even amid the crisis, the government is increasing curbs on the real estate sector, further hitting property firms. For example, in addition to new rules that restrict construction of tall buildings in a bid to improve urban air quality and life, the housing agency in the country has now asked developers to focus on low-rise residences. The central bank in the country has also said it will boost lending to help developers finish stalled property projects and boost demand, in a bid to decrease the woes of the property sector. 

In early May, the central bank cut mortgage rates by two-tenths of a percentage point for first-home buyers. The lending pace for loans has now reached the fastest level since 2019, helping boost the fledgling market. However, unhappy home-buyers are still refusing to pay mortgages, as property firms scramble to raise cash to pay lenders. The slowdown is threatening to plunder the Chinese economy and affect prominent stocks like Alibaba Group Holding Limited (NYSE:BABA), Baidu, Inc. (NASDAQ:BIDU), and NIO Inc. (NYSE:NIO) in the process.

Our Methodology

The companies that are based in China and enjoy widespread popularity among real estate investors were selected for the list. The business fundamentals of these firms and the latest updates, both positive and negative, related to them are also discussed to provide some additional context. Data from around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.

10 Chinese Real Estate Stocks to Watch as Analysts Predict More Defaults and Crisis

Photo by Edward He on Unsplash

Chinese Real Estate Stocks to Watch as Analysts Predict More Defaults and Crisis

10. Leju Holdings Limited (NYSE:LEJU)

Market Capitalization as of July 25: $28 million     

Leju Holdings Limited (NYSE:LEJU) provides online to offline real estate services in China. Some of these, offered through the Leju platform, include e-commerce, online advertising, and online listing services. The company runs a host of real estate and home furnishing websites of SINA Corporation as well. The firm was founded in 2013 and is based in Beijing. The online services of the firm are complemented by discount coupons, physical property visits, marketing events, and pre-sale customer support. 

On May 10, Leju Holdings Limited (NYSE:LEJU) announced that it would be changing the ADS ratio from one ADS representing one share to one ADS representing 10 shares. The change is equivalent to a 1-for-10 reverse ADS split for those who hold shares of the firm in the US. 

At the end of the first quarter of 2022, 2 hedge funds in the database of Insider Monkey held stakes worth $717,000 in Leju Holdings Limited (NYSE:LEJU), compared to 3 in the preceding quarter worth $1 million. 

Among the hedge funds being tracked by Insider Monkey, New York-based firm Renaissance Technologies is a leading shareholder in Leju Holdings Limited (NYSE:LEJU), with 1 million shares worth more than $693,000. 

Just like Alibaba Group Holding Limited (NYSE:BABA), Baidu, Inc. (NASDAQ:BIDU), and NIO Inc. (NYSE:NIO), Leju Holdings Limited (NYSE:LEJU) is one of the stocks on the radar of elite investors. 

9. Xinyuan Real Estate Co., Ltd. (NYSE:XIN)

Market Capitalization as of July 25: $35 million   

Xinyuan Real Estate Co., Ltd. (NYSE:XIN) engages in residential real estate development. Some of these include multi-layer apartment buildings, retail outlets, leisure and health facilities, kindergartens, schools, offices, and other commercial properties. The company also offers a host of other services related to the property sector, like landscaping engineering and management, real estate consulting and marketing, leasing management, and technical services. It was founded in 1997 and is based in Beijing. 

In late March, Xinyuan Real Estate Co., Ltd. (NYSE:XIN) announced that it had signed a strategic agreement with Wanda, the largest commercial real estate firm in the world, for comprehensive and in-depth business cooperation. 

At the end of the first quarter of 2022, 3 hedge funds in the database of Insider Monkey held stakes worth $146,000 in Xinyuan Real Estate Co., Ltd. (NYSE:XIN), the same as in the preceding quarter worth $120,000. 

Among the hedge funds being tracked by Insider Monkey, New York-based firm Renaissance Technologies is a leading shareholder in Xinyuan Real Estate Co., Ltd. (NYSE:XIN), with 95,300 shares worth more than $107,000. 

8. X Financial (NYSE:XYF)

Market Capitalization as of July 25: $156 million 

X Financial (NYSE:XYF) provides personal finance services in China. The firm basically functions as an online marketplace that connects borrowers with investors. Among a host of loans that the platform offers, such as credit loans, card loans, preferred loans to small business owners, and revolving loans, the company also offers housing loans. The housing loans function as a home equity loan product for property owners. The company was founded in 2013 and is based in the Nanshan of Shenzhen. 

On May 23, X Financial (NYSE:XYF) posted earnings for the first quarter of 2022, reporting a revenue of more than $140 million, up over 1% compared to the revenue over the same period last year. 

Among the hedge funds being tracked by Insider Monkey, New York-based firm Renaissance Technologies is a leading shareholder in X Financial (NYSE:XYF), with 132,375 shares worth more than $365,000. 

At the end of the first quarter of 2022, 2 hedge funds in the database of Insider Monkey held stakes worth $545,000 in X Financial (NYSE:XYF), the same as in the preceding quarter worth $604,000. 

7. Fanhua Inc. (NASDAQ:FANH)

Market Capitalization as of July 25: $264 million     

Fanhua Inc. (NASDAQ:FANH) operates as an insurance broker. The company posted earnings for the first quarter of 2022 on May 23, reporting earnings per share of $0.12, beating analyst predictions by $0.02. The revenue over the period was more than $103 million, down close to 35% compared to the revenue over the same period last year. The firm is also trying to build a dividend profile, having paid dividends to shareholders for the past two years. In late March, it had declared a quarterly dividend of $0.15 per share, in line with previous. Fanhua Inc. (NASDAQ:FANH) provides property and casualty insurance products. The company was founded in 1998 and is based in the Guangzhou region of China. It employs over 5,700 people in the country. 

At the end of the first quarter of 2022, 4 hedge funds in the database of Insider Monkey held stakes worth $1.2 million in Fanhua Inc. (NASDAQ:FANH), compared to 7 in the preceding quarter worth $2.8 million. 

Among the hedge funds being tracked by Insider Monkey, Boston-based firm Arrowstreet Capital is a leading shareholder in Fanhua Inc. (NASDAQ:FANH), with 99,152 shares worth more than $722,000. 

6. KE Holdings Inc. (NYSE:BEKE)

Market Capitalization as of July 25: $17.6 billion   

KE Holdings Inc. (NYSE:BEKE) provides real estate services. These include existing and new home sales, home rentals, home renovation and furnishing, and other services. The firm also owns a real estate brokerage branded store named Lianjia and a franchise model for connected brokerage stores named Deyou. The firm beat market estimates on earnings per share and revenue for the first quarter of 2022 by $0.13 and $230 million respectively in late May. The firm was founded in 2001 and is based in the capital Beijing. 

On July 21, Citi analyst Harry Chen initiated coverage of KE Holdings Inc. (NYSE:BEKE) stock with a Buy rating and a price target of $22.50, backing the firm to be an “early gainer from a sales turnaround” in the property sector in the coming months.  

Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Lone Pine Capital is a leading shareholder in KE Holdings Inc. (NYSE:BEKE), with 30 million shares worth more than $622 million. 

At the end of the first quarter of 2022, 34 hedge funds in the database of Insider Monkey held stakes worth $882 million in KE Holdings Inc. (NYSE:BEKE), compared to the same in the preceding quarter worth $2.3 billion. 

Along with Alibaba Group Holding Limited (NYSE:BABA), Baidu, Inc. (NASDAQ:BIDU), and NIO Inc. (NYSE:NIO), KE Holdings Inc. (NYSE:BEKE) is one of the stocks that hedge funds are monitoring. 

In its Q3 2021 investor letter, Tao Value, an asset management firm, highlighted a few stocks and KE Holdings Inc. (NYSE:BEKE) was one of them. Here is what the fund said:

“As witnessed in the past quarter, the government intervention in Chinese private sector is elevated to an unprecedented level. Given this background, I thoroughly reviewed all our Chinese holdings and made a few changes. We exited KE Holdings Inc. (NYSE:BEKE), for high potential regulatory risk and the passing of the visionary founder & CEO Zuo Hui (who was a core tenet of our original thesis).” 

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Disclosure. None. 10 Chinese Real Estate Stocks to Watch as Analysts Predict More Defaults and Crisis is originally published on Insider Monkey.

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