China’s health care, infrastructure stocks lure global bargain hunters even as coronavirus pandemic roiled equity markets in March
- Foreign funds have pulled 70 billion yuan (US$9.9 billion) this month from Stock Connect amid rush for exits
- Shenzhen Mindray, Wuxi AppTec benefited from fund inflows; Ping An Insurance, Midea and banks were dumped
The choices show how managers are adjusting their portfolios in search of winners amid global efforts to contain the Covid-19 disease, as well as growing expectations that China will step up investments in roads, bridges and wireless networks to shore up faltering growth.
Chinese authorities are loosening the lockdown in the epicentre of Hubei province from next month, after allowing some factories and businesses to reopen in signs the crisis is abating.
Overseas investors dump Chinese stocks at fastest pace ever
“In the long turn, there will be an acceleration in building up the software and hardware in the public health system,” said Luo Jiarong, an analyst at GF Securities in Shanghai. “There’s increasing awareness among the public” after this episode, he added.
Shenzhen Mindray is China’s biggest medical-equipment maker whose line-ups include ventilators, according to its website. Its stock has risen 7.2 per cent this month and more than doubled over the past year. Reports suggest a shortage of ventilators worldwide as Covid-19 cases surged.
Shanghai-based Wuxi AppTec provides research and development and manufacturing facilities for pharmaceutical and biotech companies to advance discoveries and treatment for diseases. Its shares fell 15 per cent in March, trimming its 12-month gain to 44.5 per cent.
China’s factories work 24/7 to build ventilators for Milan, New York amid coronavirus pandemic
They have since dumped some of their favourite picks such as financials, consumer stocks and electronics makers during the March exodus, Citic Securities said. Ping An Insurance Group, household appliances maker Midea Group and China Merchants Bank bore the brunt of selling, it said.
China saw a historic slump in economic activity amid manufacturing and transport paralysis. Industrial production, fixed-asset investment and retail sales recorded declines in the January-to-February period while industrial profits crashed and banks brace for bad-debt blowout.
Chinese banks brace for bad debt blowout as coronavirus pandemic piles weight on to struggling, debt-ridden businesses
Apart from health care-related names, other actively traded stocks in March included Sany Heavy Industry, the nation’s biggest engineering machinery producer, and cement manufacturer Anhui Conch, according to Stock Connect data.
Foreign fund outflows will probably slow and be reversed early next month, according to Citic Securities, with policymakers injecting massive liquidity into the markets and unveiling stricter virus containment measures worldwide.
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