The value of Chinese stocks looks "very attractive", but we should not expect a sharp increase in the coming months, said Kelvin Tay, regional investment director at UBS Global Wealth Management.
"Chinese stocks are very cheap. If we compare the performance of China's stock indexes with European and American ones this year, they are lagging by about 40%," Tay said.
Since the beginning of this year, the Chinese CSI 300 index has fallen by about 5%. Meanwhile, the Hang Seng index has declined by more than 14% over the same period. Meanwhile, the S&P 500 index is trading at an all-time high, and the European Stoxx 600 index is up more than 22% this year.
However, Tay warned that against the background of a "lack of significant catalysts," Chinese stocks are likely to consolidate in the next three months. He also added that the improvement in the situation in China's real estate sector could give momentum to stocks.
Meanwhile, Tay said that Chinese companies listed on the Hong Kong Stock Exchange, which have come under pressure this year, are likely to be much more attractive compared to their mainland counterparts, and will receive support from the weakening yuan.