Latest news with #LauraWang
CNBC
06-07-2025
- Business
- CNBC
Where China's investors are being urged to hide out locally in the second half
While the China technology story hasn't changed enough to warrant major changes to portfolios, local stock investors are now being encouraged to take a more conservative turn as they gear up for the second half. "We caution against a potential volatility surge in the next month or two," a team led by Morgan Stanley's chief China equity strategist Laura Wang said in a report Thursday. The analysts noted that sentiment toward mainland Chinese stocks, known as "A Shares," dropped in the past week as Chinese policymakers have so far failed to bolster growth, nor are they expected to in a Politburo meeting later this month. In addition, the deadline for U.S. trade deals with most countries looms on July 9, with the 90-day tariff truce with China set to expire in mid-August. Mainland China stocks rose slightly last week, while more globally connected and tech-dominated Hong Kong stocks fell. Dividend plays While continuing to endorse some AI names, Morgan Stanley's Wang on Thursday also recommended "maintaining some exposure to dividend yield plays." One of Morgan Stanley's favored picks for the near term is Hong Kong-listed Chinese insurer PICC P & C , which analyst Rick Zhao highlighted in June as offering a dividend yield of 4.5% and the potential to benefit from growth in auto insurance. The Wall Street investment bank swapped PICC for Pop Mart , the maker of Labubu toys, on its China-Hong Kong Focus List in mid-June. Other local Chinese analysts are also highlighting high dividend plays in their outlooks for the second half of the year. "Amid uncertainties, our focus is diving into fund flow structure and market style," UBS Securities China equity strategist Lei Meng said in a report last Monday. He noted that medium- and longer-term investors favor high-dividend stocks and banks, which are also supported by increased state-backed stock buying. For the second half of the year, Meng expects inflows into tech-related sectors to slow after strong allocations in the first six months. Foreign and domestic investor sentiment toward tech stocks improved earlier this year on the back of renewed optimism toward Chinese artificial intelligence , while the outlook for China's broader economic growth was more muted. Varied performance The contrast played out in the performance of individual stocks and leading market indexes. Hong Kong's Hang Seng Index, dominated by tech stocks like Alibaba Group and Tencent Holdings , gained about 20% in the first half of the year, while mainland China's Shanghai Composite — containing more state-owned financial and industrial companies — rose by less than 3%. Also driving interest in high-yielding Chinese stocks is mainland China investors looking for higher returns than generally available domestically, a team led by J.P. Morgan's Wendy Liu said in a late June report. Their preferred high-yielding stocks include PetroChina , with a 7.3% dividend yield, and CR Power, with a 6.1% yield. Both are listed in Hong Kong. Increased interest from mainland Chinese investors comes at the same time as they face more restrictions in reaching the U.S. and other markets. In contrast, global institutional investors still largely see U.S. stocks as the lowest risk, and can look to Europe, China or emerging markets when they need to diversify, said Liqian Ren, head of quantitative investment at WisdomTree. For "investors outside China, the unglamorous stocks [such as utilities], it's not going to be where they park their cash," she said. Ren also noted that several leading Chinese AI companies, such as ByteDance, are not publicly traded. —CNBC's Michael Bloom contributed to this report.
Mint
22-06-2025
- Business
- Mint
Hong Kong Stock Rally Shakes Up Investor Playbook for China
Wall Street entered 2025 with bullish bets on onshore Chinese stocks, counting on Beijing's stimulus drive to cushion the blow from US tariffs. Six months in, they couldn't have been more wrong. Blame it on the breakthrough by DeepSeek in artificial intelligence that suddenly turned the tide in favor of Chinese shares listed in Hong Kong. With persistent economic woes battering the onshore market, the Hang Seng China Enterprises Index has beaten the CSI 300 Index by nearly 20 percentage points so far in 2025, heading for the biggest annual outperformance in two decades. Strategists at Julius Baer Group Ltd. and Morgan Stanley are among those expecting the Hong Kong market's lead to continue. A slew of new hot listings, including bubble tea maker Mixue Group and battery giant Contemporary Amperex Technology Co. Ltd., has reignited global interest toward the financial hub and expanded investment options. Mainland investors have poured nearly $90 billion into Hong Kong stocks this year, already nearing 90% of the whole amount for 2024. The sector structure in Hong Kong 'is also becoming more comprehensive with recent listings and upcoming IPOs,' said Richard Tang, China strategist at Julius Baer. 'H-shares are likely to continue outperforming A-shares driven by global rebalancing flows and strong Southbound flows,' he added, referring to Hong Kong and mainland-listed stocks, respectively. As the Hang Seng China gauge has gained 17% this year, the CSI 300 Index has shed more than 2%. Analysts attribute the weakness to the onshore market's composition — heavy on property, financial and traditional consumption stocks — which are more reliant on domestic demand. Tech heavyweights including Alibaba Group Holding Ltd. and Tencent Holdings Ltd. are listed in Hong Kong. Despite China's unexpectedly strong retail sales in May, deflationary forces and a housing slump persist. Even as trade tensions continue to simmer, the big bang stimulus from Beijing that some investors had hoped for has yet to materialize. A key source of support for the A-share market has also subsided. After actively propping up stocks early April as tariff shocks hit, state funds have been notably absent, according to Bloomberg's analysis of exchange-traded funds purchased by Central Huijin Investment. Meanwhile, things have been coming together for Hong Kong. HSBC Holdings Plc expects mainlanders' purchases via the southbound stock connect to reach $180 billion this year, an unprecedented amount. Read: What's Behind China's Listing Frenzy in Hong Kong?: QuickTake A reassessment of China's tech potential has driven a re-rating of stocks in Hong Kong. The Hang Seng China gauge now trades at 9.3 times its forward earnings estimates, above a five-year average of 8.5 and sharply higher than the 2024 low near a ratio of six. 'More single-stock opportunities related to AI and new consumption, particularly the larger caps, are listed in Hong Kong,' Morgan Stanley strategist Laura Wang wrote in a note earlier this month. 'Some of the long-term well-liked A-share companies are choosing to come to Hong Kong for dual-listing.' The steep underperformance of A-shares, however, means there may be room for catch-up. The premium that onshore stocks have long commanded over Hong Kong peers has narrowed to about 30%, below a five-year average of around 42%. Fiscal stimulus could revive interest in beaten-down sectors onshore, such as consumer staples. There's also an array of hardware tech firms that should benefit from Beijing's push for self sufficiency. 'A-shares still have investment appeal,' said Agnes Ng, portfolio specialist at T. Rowe Price Group Inc. 'If China's economic growth slows in the second half and stimulus is deployed, A-shares would benefit directly.' Yet the limited pool of attractive megacap stocks onshore means the recovery will once again hinge on if and when Beijing will deploy greater stimulus. That lingering uncertainty will likely keep investors favoring Hong Kong for the time being. 'H-shares are typically higher beta due to the index make-up — and in an up year are likely to outperform,' said Robert Mumford, investment advisor at GAM Investments. 'The end-goal of a range of policy stimulus is to increase consumption, which is the core underlying business of the internet platform companies. Hence we are more positive on H shares versus A.' This article was generated from an automated news agency feed without modifications to text.
Yahoo
20-06-2025
- Business
- Yahoo
China was called 'uninvestable' not long ago. Why investors are changing their minds.
After investors fled in recent years, Wall Street is warming up to Chinese stocks again. Investors are encouraged as trade tensions ease and AI advances. Goldman Sachs identified 10 Chinese stocks it likes, including Tencent and Alibaba. Wall Street has shunned China's stock market for its volatility amid the country's economic issues. A trade war, tough regulations, and geopolitical tensions have made it difficult for investors to navigate, but as tensions ease and AI technology continues to advance, investors are starting to warm up to China again. "China has been a market that has been deemed almost uninvestable for the last year or two," Osman Ali, Goldman Sachs Asset Management's global cohead of quantitative investment strategies, said at the bank's mid-year investment outlook on Wednesday. "That's starting to change, both as a consequence of better growth, a consequence of reform, and also, hopefully some easing trade and tariff tensions." Investors' changing opinions on China come at a time when US exceptionalism is increasingly under scrutiny. Uncertain tariff policy has left businesses scrambling and cut into profit margins, and the rising US deficit has led to concerns about the status of US Treasurys as a safe-haven asset. That's not to mention the disruption that DeepSeek caused earlier this year, leaving investors wondering if US technological supremacy was as unrivaled as they once believed. A more optimistic tariff outlook is also boosting optimism. After the US and China dialed down trade tensions, Goldman Sachs raised its GDP growth estimates for China from 4% to 4.6% for 2025. The bank also raised its 12-month outlook for the Chinese equity indexes MSCI China and CSI300, pricing in an 11% and 17% implied upside, respectively. Nomura Capital also upgraded Chinese stocks to a "tactical overweight" in early May. Laura Wang, Morgan Stanley's chief China equity strategist, expects an increase in flows into Chinese equities within the next six to 12 months due to their low valuations and earnings growth outlook. She's eyeing increasing willingness among global investors to diversify into China, and Morgan Stanley has upgraded its MSCI China earnings growth outlook for this year by 2%. "There is a declining trend of US exceptionalism," Wang said on Bloomberg on June 5. "We are also seeing the technology breakthrough led by Chinese companies, which are potentially pushing up the ROE and earnings growth for MSCI China for the offshore space." While the Magnificent Seven have reigned supreme among US equities, China has its share of powerhouse companies investors might want to pay attention to. Goldman Sachs recently published a report identifying 10 of China's biggest stock market names with a buy rating, which the bank dubbed the "Chinese Prominent 10." These include Tencent, Alibaba, Xiaomi, BYD, Meituan, NetEase, Midea, Hengrui, and ANTA and span industries ranging from tech to pharmaceuticals. Some of these companies are already making waves both in and out of China. For example, the electric vehicle company BYD has generated sales comparable to Tesla and has expanded aggressively in Europe and Latin America. The bank believes these companies have the potential "improve their competitive and comparative advantages, generate positive equity returns for shareholders, and outperform vs. their industry peers in both the US and Chinese stock markets." Read the original article on Business Insider
Business Insider
20-06-2025
- Business
- Business Insider
China was called 'uninvestable' not long ago. Why investors are changing their minds.
Wall Street has shunned China's stock market for its volatility amid the country's economic issues. A trade war, tough regulations, and geopolitical tensions have made it difficult for investors to navigate, but as tensions ease and AI technology continues to advance, investors are starting to warm up to China again. "China has been a market that has been deemed almost uninvestable for the last year or two," Osman Ali, Goldman Sachs Asset Management's global cohead of quantitative investment strategies, said at the bank's mid-year investment outlook on Wednesday. "That's starting to change, both as a consequence of better growth, a consequence of reform, and also, hopefully some easing trade and tariff tensions." Sell America Investors' changing opinions on China come at a time when US exceptionalism is increasingly under scrutiny. Uncertain tariff policy has left businesses scrambling and cut into profit margins, and the rising US deficit has led to concerns about the status of US Treasurys as a safe-haven asset. That's not to mention the disruption that DeepSeek caused earlier this year, leaving investors wondering if US technological supremacy was as unrivaled as they once believed. A more optimistic tariff outlook is also boosting optimism. After the US and China dialed down trade tensions, Goldman Sachs raised its GDP growth estimates for China from 4% to 4.6% for 2025. The bank also raised its 12-month outlook for the Chinese equity indexes MSCI China and CSI300, pricing in an 11% and 17% implied upside, respectively. Nomura Capital also upgraded Chinese stocks to a "tactical overweight" in early May. Laura Wang, Morgan Stanley's chief China equity strategist, expects an increase in flows into Chinese equities within the next six to 12 months due to their low valuations and earnings growth outlook. She's eyeing increasing willingness among global investors to diversify into China, and Morgan Stanley has upgraded its MSCI China earnings growth outlook for this year by 2%. "There is a declining trend of US exceptionalism," Wang said on Bloomberg on June 5. "We are also seeing the technology breakthrough led by Chinese companies, which are potentially pushing up the ROE and earnings growth for MSCI China for the offshore space." China's 'Prominent 10' While the Magnificent Seven have reigned supreme among US equities, China has its share of powerhouse companies investors might want to pay attention to. Goldman Sachs recently published a report identifying 10 of China's biggest stock market names with a buy rating, which the bank dubbed the "Chinese Prominent 10." These include Tencent, Alibaba, Xiaomi, BYD, Meituan, NetEase, Midea, Hengrui, and ANTA and span industries ranging from tech to pharmaceuticals. Some of these companies are already making waves both in and out of China. For example, the electric vehicle company BYD has generated sales comparable to Tesla and has expanded aggressively in Europe and Latin America. The bank believes these companies have the potential "improve their competitive and comparative advantages, generate positive equity returns for shareholders, and outperform vs. their industry peers in both the US and Chinese stock markets."
Yahoo
06-06-2025
- Business
- Yahoo
Morgan Stanley Sees More Inflows Into Chinese Equities
Morgan Stanley's Laura Wang discusses her outlook for Chinese equities on Bloomberg Television. Wang says a weaker US dollar is "positive" for China's stock markets and adds that the firm expects more inflows in the next six to 12 months.
