China Stocks Approach Bull Market as Investors Catch Up on Gains
Comment of the Day

June 27 2022

Commentary by Eoin Treacy

China Stocks Approach Bull Market as Investors Catch Up on Gains

This article from Bloomberg may be of interest to subscribers. Here is a section:

Adding to a growing number of market participants turning more positive on Chinese shares, abrdn plc’s regional chairman Hugh Young said they look to be the best home for fresh money in Asia amid a tough investment environment.

“We are inclined to put more money into China again, depends on the portfolio,” Young said in an interview on Monday, adding that the firm underweights the country’s shares in portfolios. “It’s very hard to be super bullish about anything at the moment” but valuations in China are reasonable and the investing landscape could improve.

Deutsche Bank AG’s private bank global chief investment officer Christian Nolting said last week he was considering turning overweight on Chinese stocks and Morgan Stanley, Bank of America and Jefferies Financial Group all ramped up bullish commentary this month.

Eoin Treacy's view

Xi Jinping’s statement that China will hit its growth target has been greeted with enthusiasm by investors. While COVID zero represents a challenge for growth, it increases the potential more liquidity will be made available. At present concerns about further inflating asset bubbles are on being downplayed.

The Hang Seng Chine Enterprises Index hit a new three-month high today. It was led higher by Xiaomi digital health companies like Alibaba Health and JD Health.

All these companies have experienced steep declines and are rebounding on the promise of new liquidity measures.

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