Renowned investor Michael Burry, of ‘The Big Short’ fame, has steadily been increasing his exposure to Chinese markets — starting with Q4 of 2023, and extending to Q1 and Q2 of 2024, per the 13F filings he has submitted to the SEC through his firm, Scion Asset Management.
According to the latest filings, Chinese stocks account for 45% of Burry’s portfolio — and one of the standout successes among his holdings is B2C e-commerce giant JD.com (NASDAQ: JD).
At press time, JD stock price is $39.79 — having rallied by 46.27% over the course of 2024.
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However, JD share price has dropped by 5.53% over the last week — and economic uncertainty abounds regarding Chinese markets.
In the midst of all of this, two major investment firms are unequivocally bullish. Barclays and JPMorgan (NYSE: JPM) see a lot more room to grow — and increased their price targets by 25%.
Barclays and JPMorgan set ambitious JD stock price target
On October 16, Barclays equity researcher Gregory Zhao reiterated an ‘Overweight’ rating — and increased his price target from $40 to $50.
Although the stimulus measures left investors disappointed in terms of equity markets, Zhao expects that the policy shift will have a positive impact on the business going forward.
In a note, he expressed that he expects year-over-year (YoY) growth to return to single digits, and forecasts that the next earnings report will show demand picking up in September due to a surge in appliance sales.
Similar sentiments were echoed by Andre Chang of JPMorgan. The two investment firms are of one mind on JD — Chang also raised his price forecast for JD from $40 to $50 while reaffirming an ‘Overweight’ rating.
This is quite a strong vote of confidence — JPMorgan had previously called the stock ‘too cheap to ignore’ back in August when JD share price was $28.46. Since then, it has rallied by 39.81% — but the bank obviously still sees lots of upside.
JD stock price tumbling amid market uncertainty
An initially promising stimulus package announced by the People’s Bank of China on September 24 saw the Chinese market go parabolic — on September 30, the Beijing Stock Exchange 50 Index posted its best single-day gain in history, rallying by 22% over the course of the day.
Earlier this year, foreign investors had missed out on a potential $15 billion profit by withdrawing record amounts from the Chinese markets in Q2 2024. FOMO was to be expected — investments returned and as the surge continued, short sellers accrued losses of $7 billion on Chinese stocks.
However, the rally was cut short on October 8 — when the National Development and Reform Commission announced relatively anemic measures that disappointed investors.
Uncertainty and profit-taking ensued — the Hong Kong Hang Seng Index had its worst day since 2008, while the larger CSI 300 index saw a 12% correction to the downside. This is what caused JD stock prices to drop.
While investors are no doubt frustrated and profit-taking is occurring on a massive scale, it would seem like major institutional players are relatively satisfied with the Chinese stimulus measures, and see broad-scale recovery in the making in the long term.
