China Reopening Rally - These Sectors & Stocks Worth Investing
Institutions including Bank of America, J.P. Morgan, and Morgan Stanley upgraded recommendations for Chinese stocks. They also mentioned the worth-investing opportunities.
1. Top Institutions Turned Bullish on China's Equities?
1) Morgan Stanley upgraded their position on equities in the benchmark MSCI China index to “overweight” from “equal-weight”and raised its target on the Hang Seng Index to 21,200 points from 18,200 points.
2) Goldman Sachs forecasts 16% index returns for $MSCI China A50 Index - main 2212(MCAmain)$ and $CSI300(000300.SH)$ next year and recommends an overweight allocation to China.
3) JP Morgan expects a 10% potential upside in MSCI China in 2023.
4) Bank of America Securities said the markets might have already bounced back, but there is still “a great opportunity to buy”China stocks in the next few months.
But not all institutions are bullish on China.
UBS is still waiting for a clearer outlook
"We would rather miss the first 10% gains, and wait until when we can see clearer, ongoing signs of policy pivot," said Eva Lee, head of Greater China equities at UBS Global Wealth Management.
2. These Sectors & Stocks Worth Investing
Analystes said, two sets of stocks will be the biggest beneficiaries of China’s reopening.
1. Firms that will benefit directly – hotels, beers, transport, airlines, and airports, as well as Macau casino operators. Their business will increase when people are free to travel.
2. Large-cap index, heavy liquid, high beta names. (maybe the tech companies)
1) Travel related stocks saw a boost:
Airlines- $Cathay Pacific Airways, Ltd.(CPCAY)$ rose more than 5%, $CHINA SOUTH AIR(01055)$ and $CHINA EAST AIR(00670)$ each rose around 10% in the past one month.
Gaming industry- $SANDS CHINA LTD(01928)$ was up 33.07%; $GALAXY ENT(00027)$ was up 17% in the past one month
On November 28, JP Morgan Chase increased its holding of$GALAXY ENT(00027)$ by 1999.6541 million shares at HK$42.6809 per share, for a total amount of about HK$853 million.
2) Big China's Internet rebounds as well
China equity strategist of Bank of America picked internet and financial stocks to lead the short-term rebound.
Morgan Stanley recommends an increased allocation to consumer goods companies and post-pandemic sectors, as well as an increased allocation to offshore China equities.
Tech stocks rose sharply, with $Bilibili Inc.(BILI)$ up 73.94%, $Pinduoduo Inc.(PDD)$ up 40.81%, and $Meituan(03690)$ up 12.57%. $TENCENT(00700)$ rose 22.13% in the past month.
Do you have plan to join the China reopening rally?
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@LMSunshine sounds familiar ? Friends think alike 😁
Many gurus have called bottom for Chinese equities in the past but they have been proven wrong time and again. To manage the risk, size the position when entering so that you are able to ride on the upside if it’s right or you have sufficient dry powder to add more if it trends lower.