Ekonomické zprávy
26.10.2021

HSBC upgrades China stocks to overweight

Bloomberg reports that HSBC Holdings analysts upgraded their call on Chinese stocks to overweight, saying investors had become too bearish on a market that now offers value in real estate, industrials, healthcare and some banks.

“Yes, China is struggling with growth and a stronger U.S. dollar is not good news for China’s stock markets. But that’s now well-known and is priced in,” Herald van der Linde, the bank’s head of equity strategy for Asia Pacific and colleagues wrote in a note.

With the Communist Party’s twice-a-decade congress looming next year, there is a likelihood of more targeted measures to ensure growth, according to HSBC. Yet mutual funds are now underweight Chinese stocks from both a global and regional perspective, they said.

While regulatory crackdowns and the crisis at China Evergrande Group are grabbing headlines, HSBC is paying attention to the market’s 12-month price-earnings ratio, which it sees at 12.9 times versus 17 times at the start of the year. 

“China is not expensive,” they said. “China has never been this cheap versus India -- FTSE India is now trading at a premium of 95% to China, a record high.”

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