Analysis of the Causes of Pressures on Chinese Concept Stocks and the Investment Value of Core Chinese Concept Stocks

Based on the latest market data and news, I provide a systematic analysis of

• Nasdaq plans to quadruple the minimum fundraising threshold to $25 million, which is expected to take effect around the second quarter of 2026
• This policy will significantly reduce the number of Chinese enterprises that meet the new requirements, forcing many small and medium-sized enterprises to rethink their financing strategies[1]
• As of 2025, 11 Chinese concept stocks have been suspended from trading in a concentrated manner, indicating a significant increase in regulatory pressure

• Although China and the U.S. reached an audit cooperation agreement in 2022, the PCAOB’s 2025 inspection found that
  34% of Chinese concept stock audit projects have “significant deficiencies”
  [2]
• Core issues such as sensitive data processing and equivalence of regulatory authority remain unresolved
• China-U.S. economic and trade talks show that disputes over audit paper identification still pose potential delisting risks

• In 2025, 63 Chinese enterprises listed in the U.S. raised only about $1.12 billion, a
  41%
  decrease compared to 2024
• The average fundraising amount is less than $20 million, indicating a significant weakening of capital support for Chinese concept stocks in the U.S. stock market [1]

• The Nasdaq Golden Dragon China Index continued to face pressure in 2025, with some Chinese concept stocks suffering from insufficient liquidity
• Companies like OneConnect Financial Technology (OCFT) and Dada Nexus (DADA) have chosen to delist via privatization due to prolonged low stock prices and insufficient liquidity [1]

• In January 2026, China issued new regulations that
  ban major platforms such as Alibaba from forcing merchants to participate in promotions
  and other behaviors that disrupt market order; the new regulations will take effect in February [3]
• This has heightened market concerns about adjustments to platform business models

• In 2025, the size of China’s gaming market reached RMB 350.8 billion, a record high, and NetEase, as an industry leader, continues to benefit [4]
• The international version of Where Winds Meet acquired
  15 million global players
  in its first month of launch, setting a new record for overseas promotion of Chinese martial arts games

• Net profit margin of
  32.45%
  and operating profit margin of
  31.60%
  , far exceeding the industry average
• Ample cash flow, current ratio of 3.41, and extremely robust financial structure

• NetEase continues to invest in artificial intelligence technology to improve advertising accuracy and conversion rates
• AI-driven businesses such as NetEase Youdao continue to contribute incremental revenue

• Executive Changes: Ding Yingfeng, who led the Interactive Entertainment Group for 23 years, retired on December 31, 2025, and moved to an advisory role
• High reliance on core game products; need to pay attention to the iteration rhythm of new products
• Overseas market expansion faces challenges of cultural differences and localized operations

• AI cloud services have become the core growth engine, and market competitiveness continues to improve
• Despite the slowdown in retail business, the cloud business remains resilient [5]

• 89.5%
  of analysts have given a “Buy” rating
• Consensus target price is $190.00, representing a
  28.8%
  upside potential from the current stock price [6]

• International e-commerce business maintains a good growth momentum
• Global layout reduces single-market risks

• The latest quarterly financial report shows that revenue fell short of market expectations (RMB 34.8 billion vs. forecast RMB 41.8 billion), a decline of
  16.84%
  [6]
• Growth of retail business slows down, and competition intensifies

• New e-commerce regulatory rules may affect the platform’s monetization capability
• Antitrust supervision of the platform economy has become normalized

• New players such as Pinduoduo (PDD), Temu, and Shein continue to divert market share
• The rapid rise of Douyin E-commerce has changed the industry landscape

• In early 2026, the offshore RMB broke through 6.97 against the U.S. dollar, hitting a new high since May 2023
• RMB appreciation provides value support for Hong Kong stocks (denominated in Hong Kong dollars) and reduces hedging costs for foreign capital [7]
• However, the exchange rate trend still faces uncertainties and requires continuous attention

• Geopolitical risks continue to disrupt market sentiment
• Changes in international situations such as the Venezuela incident affect risk appetite
• Long-term factors such as trade frictions and technological blockades still need to be evaluated

• In 2025, the cumulative net inflow of Hong Kong Stock Connect reached
  HK$1.406 trillion
  , a year-on-year increase of 74%
• The E Fund Hang Seng Technology ETF (513010) attracted
  RMB 19.047 billion
  throughout the year
• Continuous bottom-fishing by domestic capital provides valuation support for Hong Kong-listed technology stocks [7]

1. NetEase (NTES)
   : The gaming business has a deep moat, with outstanding profitability; AI empowerment enhances valuation imagination space. With a current P/E of only 17.6x, it offers high cost performance

2. Alibaba (BABA)
   : Driven by the dual engines of cloud computing and international business, despite short-term performance pressures, the long-term logic remains unchanged. The 28.8% upside target space is attractive

3. Industry Overall
   : It is recommended to focus on leading companies with international capabilities and ample cash flow, and avoid targets that rely on a single market or have high regulatory sensitivity

[1] Securities Times - “The Market Has Changed! Multiple Giants Delist from the U.S. via Privatization, Chinese Concept Stocks Accelerate Their Return!” (https://www.stcn.com/article/detail/3561214.html)

[2] Gelonghui - “China’s Top Energy Storage Stock Files for U.S. IPO, But Its Factory Also Has to Be Relocated” (https://www.gelonghui.com/p/3389448)

[3] Bloomberg - “China Targets Online Commerce Battles in Latest Regulatory Salvo” (https://www.bloomberg.com/news/articles/2026-01-07/china-targets-online-commerce-battles-in-latest-regulatory-salvo)

[4] Yahoo Finance - “China’s video game sales reach record in 2025 amid overseas expansion, AI investment” (https://finance.yahoo.com/news/chinas-video-game-sales-reach-093000227.html)

[5] Yahoo Finance - “Alibaba Shares Fall on Analyst Downgrade Flags Rising Costs” (https://finance.yahoo.com/news/alibaba-shares-fall-analyst-downgrade-120031443.html)

[6] GuruFocus - “Alibaba (BABA) Downgraded to Hold by Freedom Capital Markets” (https://www.gurufocus.com/news/4098001/alibaba-baba-downgraded-to-hold-by-freedom-capital-markets-baba-stock-news)

[7] Phoenix Net Finance - “As Soon as 2026 Began, Tycoons Were Busy Increasing Their Positions” (https://finance.ifeng.com/c/8pfZat7CC0v)