A growing number of global investment banks, including Goldman Sachs and JPMorgan Chase & Co, have recently put down roots in Chinese assets, viewing the country as a safe haven for investable stocks amid looming recession woes. in the USA.
Behind the outperformance of Chinese assets is an effective growth spurt in recent months that has stabilized the economy and caused a turnaround in investor sentiment, market watchers said, anticipating Chinese assets will remain attractive to international investors.
Such a positive scenario bodes well for listed companies, especially those in the new energy sector, which seek to finance their expansion, thus consolidating the country’s leadership in clean energy, analysts say.
Since last January, Asia, excluding China, has recorded cumulative foreign capital outflows of $111 billion, surpassing the $93 billion recorded during the global financial crisis. But China has seen an improvement in capital inflows, Goldman Sachs said in a research note sent to the Global Times.
In June, the Asia ex-China market saw $21 billion in capital outflows, while the A-share market saw $11 billion in capital inflows through the northern leg of the stock market links between mainland China and the Hong Kong stock exchanges.
Market concerns about a US economic recession or a major market correction have had a huge impact on capital flows, particularly in North Asia, while A-shares and the ASEAN members’ equity market came out more cautious, the US investment bank wrote, recommending increased stakes in China A-shares.
“If investors look at the challenges in all markets, China really stands out as something that offers a resilient or safe haven against many of these risks,” said Mixo Das, Asian equity strategist at JPMorgan, during an interview. a TV interview on Bloomberg in late June. .
Other famous Wall Street names have joined the ranks to increase betting on Chinese assets, the Securities Times reported on Friday, citing Citi, UBS, Bank of America Securities and DBS.
Citi called Chinese stocks an outperformer, while Bank of America Securities suggested that short-term corrections in Chinese stocks can be seen as a buying opportunity. UBS, for its part, believed that Chinese stocks would continue to outperform the global equity market in the coming months.
The stability of the yuan since late May, which has seen the Chinese currency weaken only slightly against the US dollar, as the euro, the pound and the yen struggled against a dip against the dollar, also speaks volumes. on the international community’s optimism about Chinese assets.
Along with a clear pick-up in market sentiment, a series of pro-growth measures ranging from increased infrastructure investment to a surge in car purchases have supported the economy in recent months, analysts said. , betting on the recovery from a downtrend in other major markets to support a continued outperformance of Chinese assets.
Chinese stocks have stood out as a silver lining in an overall underperforming market, and the country will remain attractive to global investors even as the US Federal Reserve’s continued balance sheet reduction has tended to unsettle the global market, Raymond Deng , the investment strategist CIO of consumer investment and insurance products at DBS Bank told the Global Times on Friday.
A-shares are still showing reasonably low price-to-earnings ratios, which argues for a continued rally. This, added to the decent dividends paid out especially by the big listed banks, makes A-shares a much better option to buy compared to US stocks, Deng said.
He cited U.S. corporate earnings pressure from a downward trend in the U.S. economy as spurring increased interest in Chinese assets.
This year could be a turning point for global investors looking for safe-haven assets amid varied uncertainties, Deng said, considering Chinese equities among the top picks.
This suggests buying opportunities in Chinese financial and infrastructure stocks, the strategist continued.
The Chinese market has remained largely stable despite the fallout from Omicron’s nationwide surges and trading activity in the market has remained robust, Dong Shaopeng, an expert adviser at the China Securities Regulatory Commission, told the Global Times on Friday. describing the country as “the best destination for investment.”
As the country’s epidemic prevention and control trends are stabilizing, investment, trade and factory activities are in obvious recovery mode, Dong said, noting that energy vehicles news, in particular, proved to be a draw for investors.
Construction site of the Yangtze River crossing project for the new 500-kilovolt transmission line in east China’s Jiangsu Province on June 1, 2022. Stretching from Fengcheng to Meili, the line will further support l Integration of Energy and Electricity in the Yangtze River Delta. Photo: cnsphoto
In addition, solar power, energy storage and transmission among renewable energy are at the top of the list for those exploring opportunities in the Chinese market, he said.
These clear preferences for publicly listed companies in the broad renewable energy sector are seen as strengthening the financial profiles of these companies and, therefore, cementing China’s leadership in the global clean energy market.
A host of new energy automakers and clean energy companies have staged an impressive rally in the A-share market since late April, with some seeing their shares more than double over the period.