China's Consumption Growth May Remain Driven by Gen Z, Elderly Population — Market Talk

By Doug Busch

Investors often look to January for clues about institutional intent, and this year's opening sent a notable signal in China.

On the first trading day of 2026, the iShares China Large-Cap ETF rallied 4%, its strongest advance since mid-April amid heavy volume. The gap completed a bullish island reversal following the Dec. 16 gap down. It also pushed the FXI ETF back above a bearish head-and-shoulders formation. That shift is notable given persistent geopolitical and economic concerns. Just as importantly, the market's failure to extend losses after the sharp 7.5% weekly selloff in early October suggests downside momentum has been exhausted. From a technical standpoint, the setup is beginning to favor selective risk-taking. Here are three individual stocks that stand out.

Alibaba Group, the second-largest holding in the FXI, exerts significant influence on the broader China trade. The stock is trading roughly 22% below its recent 52-week high and is down about 17% over the past month. In the context of a 79% gain over the past year, the pullback appears orderly and brings shares back into a more attractive entry zone for investors with longer-term horizons.

The recent bout of weakness began with a bearish shooting-star candle on Oct. 2, followed by a 15% decline the next week. That slide carried the shares back toward a prior cup-base breakout near $150/share, where the stock is now trading. Notably, the depth of that pattern round number theory emerged with support near the very round $100 level in early April. On Jan. 2, the stock rebounded more than 6%, breaking out of a bullish falling-wedge formation. Some slight weakness could follow with the completion of a bearish evening-star pattern on Jan. 6. A potential entry near $147 is in an area that would fill the opening gap of 2026. If the setup holds, the shares could work back toward $190 by mid-2026, implying upside of roughly 29% from current levels. The bullish thesis remains intact as long as the stock holds above $137.

Alibaba Group closed at $146.75 Wednesday.

NetEase, an online gaming and e-commerce company, has delivered a solid 56% gain over the past year. The shares currently trade about 12% below their Sept. 17 peak and have dropped nine of the past 16 weeks, setting up a potential area for bulls to step in and defend.

The stock has clearly outperformed the FXI since the second quarter of 2025, as seen on the ratio chart below, and has been digesting those gains since. It is now retesting its breakout from a bullish inverse head-and-shoulders pattern at $140, which coincides with the 21-day exponential moving average. That level also aligns with a former double-bottom-with-handle breakout from Sept. 8, reinforcing its significance. An entry near this area makes sense, with a potential move toward $170 in the second half of the year, roughly 21% upside from current levels. The bullish thesis remains intact above $133.

NetEase closed at $141.55 Wednesday.

Hotel operator H World Group is higher by 60% since the start of 2025 and carries a dividend yield of 3.5%. It has moved higher 16 of the last 22 weeks and added another 5% this week already. It is always good to see peers doing well and Atour Lifestyle Holdings is one example.

Since August, the stock has clearly outperformed the FXI and that relative strength appears poised to continue. The uptrend has been supported by strong volume, with the stock consistently respecting its 21-day exponential moving average. Earlier, it broke above a double-bottom with handle pivot near $35 in August and a bull flag in October. More recently, the shares cleared another bull flag pivot at $49, setting the stage for a potential move toward $60, about 20% upside from current levels. The bullish case remains intact above $47.

H World Group closed at $49.80 Wednesday.

With selective Chinese stocks showing technical resilience, 2026 looks set to reward disciplined investors who focus on quality names and relative strength in the region.

Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(13:19 GMT) H World Group Price Target Raised to $52.00/Share From $48.00 by Benchmark

Q3 2025 saw robust revenue and profit growth, led by asset-light expansion and strong membership engagement. New upper-midscale brand Ji Icons was launched, and guidance for Q4 anticipates continued revenue growth, with leisure demand offsetting business travel weakness.

Based on H World Group Limited [1179] Q3 2025 Audio Transcript — Nov. 17 2025

Revenue and adjusted EBITDA grew strongly year-over-year, driven by network expansion and robust franchised business margins. Membership surpassed 300 million, and a new upper-midscale brand was launched. Q4 guidance is for moderate revenue growth, with leisure demand offsetting business travel weakness.

Based on H World Group Limited [1179] Q3 2025 Audio Transcript — Nov. 17 2025

Q3 2025 saw robust growth with revenue up 8.1% and adjusted EBITDA up 18.9% year-over-year. Asset-light business drove profit mix, and membership reached 301 million. Q4 2025 revenue is expected to grow 2%–6% year-over-year.

Original document: H World Group Limited [1179] Slides Release — Nov. 17 2025

Q3 2025 revenue grew 8.1% year-over-year to RMB7.0 billion, with net income up 15.4% to RMB1.5 billion. Asset-light expansion drove strong M&F revenue growth, while Legacy-DH saw a RevPAR increase. Q4 2025 revenue is expected to grow 2%-6% year-over-year.

Original document: H World Group Limited [1179] SEC 6-K Current Report — Nov. 17 2025