Why Tencent Could Bounce Back in the Second Half of 2022
Assuming that you're OK with the geopolitical risk of investing in Chinese stocks, there are bargains abounding in the country's tech sector. After more than a year of Beijing's crackdown on what it deemed the "reckless" growth in Chinese tech stocks, valuations have come way down. The large Chinese property sector bubble also burst last year, and the associated economic headwinds are taking their toll on growth.
Perhaps the highest-quality Chinese tech stock is Tencent (OTC: TCEHY) which sold off after its recent earnings report. Revenue growth slowed to just 8% last quarter, its first single-digit quarterly growth figure in its history as a public company.
Uncertainty across Tencent's businesses, from gaming to social media to fintech, is causing investors to avoid the stock now. But there are good reasons to believe the negative near-term trends will reverse later in 2022 -- notably, in three different ways. If they do, then Tencent sure looks like a bargain.
Source Fool.com
