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China reopening stocks: endure short-term pain for Wall Street’s top picks with 20 to 130 per cent upside potential
- Investors will need to persevere with short-term Covid-19 crisis to enjoy big upside in Tencent to Trip.com and Kingdee, reports showed
- Index targets mean Chinese stocks could advance by 8.5 per cent to 22.8 per cent from the levels at end-2022
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With China set on a reopening path in 2023, will the new year help investors recover some of the US$2.8 trillion of value destruction in the local onshore market last year?
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Local investors are hoping it will bring a lot of cheers, more so after many saw their investments in mutual funds turn sour last year. Foreign investors, with US$1 trillion of stake in the market, are relishing the zero-Covid pivot they had clamoured for over the past two years.
“The zero-Covid policy has disproportionately hurt Chinese domestic demand, the service sector in particular, but has inflicted less damage on goods-related supply chains,” said Chen Zhao, global strategist at Alpine Macro. It is logical to expect that the rebound will primarily be concentrated in final domestic demand, including capital and real estate investment, he added.
With economists turning increasingly upbeat on China’s growth outlook, here is a recap of some of the top picks from Wall Street analysts in sectors that are expected to rally the most from the reopening tailwinds.
Consumption
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