🤯 Have you seen our AI stock pickers’ 2024 results? 84.62%! Grab November’s list now.Pick Stocks with AI

China stock rebound rally still has legs- CICC

Published 05/16/2024, 01:11 AM
© Reuters
SSEC
-
CSI300
-

Investing.com-- Chinese stocks may still have space to push higher after a stellar rally over the past three months, analysts at CICC wrote in a note, citing persistent policy support and improving economic conditions. 

China’s Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rebounded some 17% and 18%, respectively, from multi-year lows hit in early-February. They were now close to entering a technical bull market from those lows. 

While most sectors benefited from a mix of bargain buying and policy hopes, CICC analysts noted that the agriculture sector outperformed during the rally, as did the heavily battered property sector. 

CICC analysts said that China’s economic recovery was still underway despite some recent signs of cooling, although it still faced some near-term challenges. Beijing was also seen steadily rolling out policy support for the economy, as well as more capital market reforms.

Recent, laggard performances in U.S. and Japanese markets- which were the top performers through 2023- also drew some foreign capital flows into Chinese markets. This trend may continue in the coming months, especially amid uncertainty over the path of interest rates in both countries. 

Watch for these three themes in Chinese markets- CICC

CICC analysts said three major themes are expected to take prominence in Chinese markets as they recover this year. 

Firstly, growth-oriented technology sectors exposed to growing industry trends, such as semiconductors and communications, which have shot into the spotlight thanks to increased interest in artificial intelligence. 

Secondly, core asset makers- specifically those of lithium-ion batteries, photovoltaic power and wind energy- were due for recovery after seeing sharp corrections in the past two years. But they were also set to benefit from increased policy support. 

Thirdly, CICC analysts said that sectors with “booming business operations and high earnings visibility,” namely new energy vehicles and similar goods that benefit from a global expansion. 

But the Chinese economy still faces increased headwinds. The U.S. government this week imposed higher tariffs on the country’s key emerging sectors, such as EVs, medicines and semiconductors. 

The Chinese government is also grappling with higher debt levels, as it struggles to increase local liquidity conditions and foster an economic recovery. 

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.