Chinese stocks are on the move, as hoped. In fact, as we noted on Jan. 10:
“It’s been a rough couple of years for China. The pandemic coupled with Beijing’s zero-COVID policy slammed its economy. That was on top of brewing U.S. tensions, with the White House barring shipments of key chip technology and other curbs. However, with China now rolling back its restrictions, and tech issues cooling, it may be time to go long on Chinese stocks. In fact, according to Morgan Stanley, the market is still underappreciating China’s reopening, and the potential for a respectable recovery. “
With that, we highlighted opportunity in the SPDR S&P China ETF (GXC), the KraneShares CSI China Internet ETF (KWEB), and Global X Copper Miners ETF (COPX) – all of which are gaining traction, and could test higher highs moving forward.
All as China just begins to reopen, and as analysts get a bit less gloomy.
According to Bloomberg, “The resumption of activity in China promises to unleash over $836 billion worth of excess savings, and may help ease fears of a global downturn as other central banks continue to tighten policy. Chinese equities stand to gain another 20%.”
Even better, Chinese stocks could be some of the top performers in 2023, with Morgan Stanley and Goldman Sachs noting the MSCI China Index could see another 10% of upside this year. Even JP Morgan just said Chinese stocks are likely to continue rallying on catalysts, such as the end of the zero-COVID policy, and easing geopolitical tensions.
“The broad market is a buy-on-dip market, thanks to further fiscal, monetary and regulatory policy shifts,” the private banking arm of America’s biggest bank said. It “strongly recommends” latching onto the reopening theme and picking up inexpensive internet companies, as noted by the South China Morning Post.
That being said, investors may want to keep an eye on stocks such as:
Alibaba (BABA), where Morgan Stanley just raised its price target to $150 from $100. Citi also raised its target to $160 from $144, and Barclays raised from $114 to $141.
JD.com (JD), where analysts at Citi just raised their price target from $60 to $96 on JD.com, with a buy rating. The firm believes the company is in a good position to recapture “consumption recovery” upside, as noted by TheFly.com.
In short, with China’s recovery underway, it’s time to buy the blood in the streets.