(Bloomberg) — Now is a great time to buy Chinese stocks, says abrdn Plc, joining a growing list of money managers turning bullish on the asset class.
“I do believe Chinese equity valuations are undemanding to say the least,” said Rene Buehlmann, chief executive officer for Asia Pacific in Singapore at the money manager, which oversees $46.5 billion in Asia. “Investors should go back into China.”
Mainland shares have rallied over the past month amid signs Beijing is winding back its strict Covid Zero policy and offering greater support for the ailing property sector. A gauge of the nation’s shares listed in Hong Kong jumped 29% in November, the biggest monthly gain since 2003, after sinking 40% from January through October.
Global investors have grown increasingly bullish as the recovery has gathered momentum. Goldman Sachs Group Inc. said last month China’s equity market would outperform in 2023. Bank of America Corp. said it has turned tactically positive on the country, while JPMorgan Chase & Co. called the late October market meltdown a buying opportunity.
The best long-term potential looks to be in areas such as China’s consumer sector, healthcare, wealth-related financial services, renewable energy and digital innovation, Abrdn’s Buehlmann said, speaking in an interview in Singapore last week.
Still, Buehlmann said a number of clients remain unconvinced.
“European and US investors are rather hesitant at the moment to go back into China in particular,” he said. “There’s a lot of nervousness around zero Covid limitations on domestic economic growth and the global geopolitical tensions including US-China rivalry and the conflicts in Ukraine.”
“This nervousness is counter balancing investors’ fear of missing out on a rapid rebound in Chinese assets,” he said.
—With assistance from Haslinda Amin and Ishika Mookerjee.