Even though regulatory pressure has been increasing on Chinese tech stocks, the industry has immense long-term growth potential. Because of that, we think it could be wise to bet on large-cap Chinese tech stocks NetEase (NASDAQ:NTES) and Baidu (NASDAQ:BIDU). They possess solid financials and still have plenty of gains to deliver. Read on.Several Chinese tech companies have been facing increasing regulatory pressures in China and the United States. However, given the tech industry’s solid long-term growth prospects, many large-cap stocks in this space are well positioned to dodge any short-term issues the industry is facing. Furthermore, an investment strategist with Matthews Asia told CNBC on July 1 that China’s recent moves to regulate its technology companies are not necessarily intended to “take the wings off” of its entrepreneurs.
Home to the world’s largest internet population, China’s internet users could hit 1 billion by next year, according to a report by Insider Intelligence. Also, the world’s second largest economy’s latest five-year plan is tightly focused on technological advancements, which could attract higher investment in the sector.
Consequently, we think it is wise to bet on fundamentally strong large-cap Chinese tech companies NetEase, Inc. (NTES) and Baidu, Inc. (BIDU). Their solid financials and consistent innovations should help these stocks continue advancing.