China eased some COVID-19 restrictions last week, following public backlash against the country strict “no COVID” policy.
As COVID rules are being eased, fund managers are now bullish on Chinese stocks in 2023 and predict a rally in stocks, report Bloomberg.
According to a survey of 134 fund managers by the media outlet, nearly 60% recommend buying Chinese stocks, while 31% say they should sell.
The survey shows that what attracts most fund managers to Chinese stocks is the country’s post-COVID reopening and easing of geopolitical tensions. Fund managers also consider Chinese stocks attractive.
Some Chinese stocks that could benefit from the rally include e-commerce giants like Alibaba Group Co., Ltd (NYSE: TORTOISE) and JD.Com Company (NASDAQ: JD) and EV manufacturers including Xpeng Group (NYSE: XPEV) and Nios Co (NYSE: NIO).
Also read: 3 Chinese stocks move on China’s COVID-19 restrictions
However, some fund managers said they were uncertain about the country’s policies and regulations, which could pose a risk to Chinese stocks.
The MSCI China Index is trading at 11 times forward earnings, below the five-year average. Moreover, the index is still far below pre-pandemic levels, Bloomberg reported.
“There seems to be an evolution from China in terms of their Covid approach,” Ben PowellAPAC chief investment strategist at that BlackRock Investment Institute, told the news agency.
Talking about China’s 2023 prospects, JPMorgan strategist Marko Kolanovic says that he remains positive about the country amid favorable monetary conditions conditions and finally fully reopened.
However, chief China economist at Nomura in Hong Kong, Dinh Lu, thinks that China’s economy will shrink by 0.3% in the fourth quarter compared to the third quarter. The Wall Street Journal reported that he cut his full-year growth forecast from 2.9% to 2.8%.
Photo via Shutterstock.
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