Latest news with #PICCP&C
CNBC
6 days ago
- 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.
CNBC
20-06-2025
- Business
- CNBC
Labubu-maker Pop Mart's shares extend slide as Morgan Stanley removes it from China focus list
BEIJING — Shares in Pop Mart, the Chinese toy company behind the recent Labubu craze, continued to tumble Friday, after Morgan Stanley removed the stock from a focus list. Pop Mart's Hong Kong-listed shares were last down more than 5%, extending their slide from the previous session when they had slumped 5.3%. That's put the high-flying stock on track for its first negative week since early May — with losses of more than 13% so far. Its year-to-date gains stand at over 160%. Morgan Stanley said in a note late Wednesday it was replacing Pop Mart with insurance company PICC P&C in the firm's China and Hong Kong focus list. The investment bank did not elaborate on why it removed Pop Mart shares. The firm on June 10 had raised its price target on the toy company to 302 Hong Kong dollars ($38.47), up from 224 HKD, on expectations that Pop Mart still had room to grow in the long term. "We think the market has fully factored in Pop Mart's exponential growth in 2025 but may not have strong conviction on the long-term outlook," equity analyst Dustin Wei and a team said in the June 10 report. "That said, in view of its lofty valuation, we do not expect this level of outperformance to continue in the next few quarters," the report said. Pop Mart shares hit a record intra-day high of 283.40 HKD on June 12. The Beijing-based toy company has rapidly expanded overseas with online sales platforms and physical stores, including in the U.S. and U.K. Pop Mart first gained popularity with its "blind box" concept, in which consumers buy unmarked boxes — which can cost from about $5 to $10 each — for a chance at getting a unique figurine and building a collection. In the last few months, the company's "Labubu" series of toys featuring an elf-like character have become a global phenomenon, even drawing the attention of fashion and culture-focused New York Magazine and The New York Times. Pop Mart has also released Labubu stuffed toys, pillows and related merchandise to capture demand. A 4-foot-tall Labubu sold for the equivalent of $170,000 at an auction in Beijing earlier this month. Many of the more affordable versions of the figurine subsequently went out of stock in mainland China. "We've seen certain trends like that before ... There seems to always be some cute thing that people have to have," Jacob Cooke, co-founder and CEO of WPIC Marketing + Technologies, told CNBC on Friday. The company helps foreign brands — such as Vitamix and iS Clinical — sell online in China and other parts of Asia. He pointed to interest last year in capybara stuffed toys. Chinese retailer Miniso, which also has stores in the U.S. and other countries, was one of the main sellers of the stuffed animal. Cooke saw Pop Mart as "more lucky than anything," although he pointed out it reflects growing interest in toys not just for children but also adults. Indicating the soaring popularity of its toys, Pop Mart's overseas sales in 2024 have already surpassed the company's overall sales in 2021. The company reported total sales, primarily domestic, of 4.49 billion yuan ($624.6 million) in 2021. In 2024, overseas sales alone surpassed that to hit 5.1 billion yuan, up 373% from a year ago, while mainland China sales climbed to 7.97 billion yuan.
