According to Goldman Sachs, investors worried about the supply chain shock from China’s Covid lockdown can look to these tech stocks. Goldman analysts said in a note on May 3 that the decline in share prices in the sector was likely “priced in the impact of the lockdown.” Besides supply chain disruptions due to Beijing’s strict zero-Covid policy, months of regulatory scrutiny from the Chinese government have continued to weigh on investor sentiment towards Chinese tech stocks. this country. As of the end of Wednesday, the Hang Seng Tech index in Hong Kong was down more than 29%. On the mainland, the Star 50 Index – the 50 largest group of stocks on the tech-heavy Star Market – has fallen more than 28% over the same period. The broader tech sector globally is also under pressure as central banks are expected to tighten monetary policy as they seek to combat inflation, with the tech-heavy Nasdaq Composite falling more. 4% on Monday. Higher interest rates tend to affect stocks in growth sectors like technology, as they make their future earnings seem less valuable. Still, Goldman analysts have identified a number of Chinese tech stocks that they see have better earnings potential in the first half of 2023. In the semiconductor sector, Goldman prefers the Chinese chipmaker. National SMIC, with a target price of HK$27/share. That represents a gain of more than 70% from Wednesday’s close in Hong Kong. Another Hong Kong-listed Chinese semiconductor stock favored by investment banks is Hua Hong Semiconductor. “Despite near-term difficulties, we remain constructive on China Semis thanks to its long-term growth from technology transformation, product line expansion and growing local demand,” Goldman analysts said. Among software stocks, Goldman has identified Chinasoft, while component maker AAC Technologies is also among the picks for companies with exposure to the smartphone sector. “We consider ongoing COVID restrictions in China and global macro uncertainties, weak market demand and potential supply chain disruptions, and companies,” said Goldman analysts. Companies that come in contact with smartphones or other consumer electronics face more serious difficulties,” Goldman analysts said. Against this backdrop, we continue to prioritize names with growing/diversifying end markets or strong idiosyncrasies such as product mix upgrades, profit margins, and more. profit sharing and new products/penetrations”.
An Ubtech Walker X Robot plays chess during the 2021 World Artificial Intelligence Conference at Shanghai World Expo Center on July 8, 2021 in Shanghai, China.
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According to Goldman Sachs, investors worried about the supply chain shock from China’s Covid lockdown can look to these tech stocks.
