Chinese stocks are expected to bottom out and buy now!
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It looks like Chinese stocks are on the verge of a rebound, and analysts are finding more reasons to be bullish on them!
At the end of March, investment analysts from $Citigroup(C)$ , $Morgan Stanley(MS)$ , and $Bank of America(BAC)$ upgraded their ratings on at least three Chinese stocks: $Tencent Music(TME)$ $Kingsoft Cloud Holdings Ltd(KC)$ $21vianet(VNET)$.
Chris Brightman, the chief investment officer of Research Affiliates LLC, a quantitative fund under Pacific Investment Management Co., said that as valuations have become cheaper, we're getting closer to the time when we can include Chinese tech giants in our portfolios.
Internet companies like $Alibaba(BABA)$ and $Tencent Holding Ltd.(TCEHY)$ have become attractive as valuations have fallen to historic lows. Growth slowdowns and fierce competition have also taken a toll on these once-high-flying stocks.
Brightman's view is echoed by his peers. Some funds have started to increase their holdings in Chinese stocks, which have the potential to rebound once the right catalyst emerges.
There are further signs that China's economic recovery is gaining momentum, and the recent rally in Chinese stocks has given hope that the market has hit a bottom and is ready to bottom out.
In stark contrast, Brightman noted that Indian stocks are very expensive. Chinese stocks, on the other hand, offer generous compensation for the huge geopolitical risks they face.
Meanwhile, some emerging market funds are making a turn. Norwegian asset manager Skagen AS and US investment firm Boston Partners have gradually increased their holdings in mainland China and Hong Kong-listed stocks in recent months.
They believe that these Chinese stocks are cheap, with risks fully reflected in their prices, and there is room for corporate earnings to improve.
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