JPMorgan named four stocks that will benefit from normalized growth as Covid-19 case numbers fall in China’s major cities. JPMorgan analysts stated that they believe there will be an increase in consumption during the second or third quarters of 2012, when the ecommerce market should recover to its normalized growth rate. They advised investors to accumulate in the ecommerce sector in 2Q22 due to relative resilience and the pace of recovery in 2H22. According to the bank, e-commerce stocks which rely on less discretionary spending will outperform. According to JPMorgan, consumer staples are expected to lead recovery in consumer demand. They have strong demand but will not be affected by disruptions in logistics. Here are JPMorgan’s Chinese ecommerce stock picks, in alphabetical order: Alibaba Pinduoduo JD.com Vipshop JPMorgan holds an “overweight” rating for both Alibaba Pinduoduo and Vipshop. This means that the bank believes the stocks will outperform the average return on stocks within its coverage. JD, Vipshop and Vipshop received a “neutral”, meaning that their performance is expected to match the analyst’s average total returns. Three criteria were used to determine stock preference: category mix; valuation; and source of margin improvement. However, analysts cautioned that the near-term gains for e-commerce companies can be expected to be less than 2020. This is due to factors like a weaker consumer market and new competitors such as Kuaishou, Douyin, and Weixin, who were still in their early stages back in 2020. China’s most serious Covid crisis since the beginning of 2020 has caused a slowdown in consumption. Data released last week painted a grim picture for consumption in the country, with April retail sales dropping 11.1% from a year ago — a larger decline than the 6.1% fall predicted in a Reuters poll.
Austin Li Jiaqi, a beauty blogger from China, applies lipstick in a livestream via the Taobao e-commerce platform on October 26, 2018, Shanghai.
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JPMorgan names the following e-commerce stocks to profit from the decline in Covid-19 in Chinese cities, and the expected rebound in consumption over the coming weeks.
