by Ian Cooper
After a rough few years, Chinese stocks are showing big signs of life.
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.
“Arguably, the policy U-turn has happened at a much faster pace than anyone’s imagination,” they said. The sentiment and liquidity inflows have already improved in recent weeks thanks to the positive changes, which will drive the market valuation towards its long-term level, they added, as noted by the South China Morning Post.
“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.
That being said, investors may want to pay close attention to stocks, such as:
Over the last few weeks, the stock ran from a low of about $70 to $117.01. And while impressive, BABA could see higher highs. If it can break above prior resistance around $125, it could potentially test $140, and perhaps even refill a bearish gap around $160. Helping, Morgan Stanley just raised its price target on BABA to $150 from $100. Citi raised its target to $160 from $144, and Barclays raised from $114 to $141.
Over the last few weeks, the stock ran from a low of about $35 to $63.60. And while impressive, JD could see higher highs. If it can break above prior resistance around $68, it could potentially test $90 again shortly. Helping, 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.
KraneShares CSI China Internet ETF (KWEB)
KWEB, which tracks the CSI Overseas China Internet Index, ran from about $20 to $35.38 in recent months. We’d like to see it run to $40, near-term, as China recovers. With an expense ratio of 0.69%, some of its top holdings include Tencent Holdings, Alibaba Group, JD.com, Netease, and Trip.com to name a few.