After years of underperformance, Chinese stocks are making a comeback.
The question now is whether this rally has legs or if it’s just another bear market bounce. I’ve been trading these names selectively, and I’m taking profits where I see fit — because in China and with these ADR stocks, nothing is ever as simple as it seems.
A Tactical Approach to Chinese Stocks
Alibaba (BABA) has been a prime example of the recent rally. After bottoming out late last year, the stock has surged more than 60%, giving traders a much-needed win in a space that’s been beaten down for years.
I bought in at $85.55, added more at $99, and just closed my position around $126 ahead of earnings. I knew the stock could run higher, which it has today, up over $136 a share this afternoon.
But after a move like this, taking those profits off the table is never a bad idea.
Other names like Bilibili (BILI), JD.com (JD) and the broader China tech ETF, KraneShares CSI China Internet (KWEB), have also seen strong rebounds.
But I’m not rushing to add new positions.
Instead, I’m holding onto a core basket of trades while looking for strategic pullbacks. China’s market may be rebounding, but that doesn’t mean it’s time to buy everything in sight.
Why China Is a Wild Card
From a valuation perspective, China looks cheap. Compared to stretched multiples in the U.S., Chinese stocks are trading at a steep discount. That’s part of why we’ve seen money rotating into international markets, with funds flowing into Europe, Brazil and even India.
But cheap doesn’t always mean safe.
China remains an unpredictable market, where policy shifts, government intervention and economic uncertainty can turn a rally into a sell-off overnight. Just look at what happened with Bilibili.
The company beat earnings on both the top and bottom line, but the stock still dropped — likely because it didn’t sprinkle enough AI buzzwords into its report.
That’s the risk with China. You can pick the right stocks, time the entries well, and still get hit by something completely out of your control. That’s why I’m staying selective.
For now, I’m holding onto BILI, keeping an eye on JD, and watching KWEB for another setup. If the market gives me a strong pullback, I might look to reload. But I’m not chasing highs, and I’m certainly not getting too comfortable in a market that has burned investors time and time again.
If China continues to rebound, there’s still plenty of upside. But if the rally stalls, I’ll be happy knowing I locked in solid gains when I had the chance — that’s how you survive.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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