Fund managers bet on China’s tech, consumer stocks to provide growth in a post-pandemic economy

Asset managers are bullish on e-commerce platforms, online entertainment companies, 5G-related stocks and pharmaceuticals

China is on a steady economic recovery and provides investment certainty, a scarcity as the rest of the world still grapples with coronavirus, portfolio managers say

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Morning rush hour in Beijing on May 22, 2020. China’s economy is showing signs of a strong recovery from Covid-19 lockdown. Photo: AFP

Published: 6:45am, 12 Jun 2020Updated: 9:15pm, 12 Jun 2020

Global fund managers are hopeful Chinese stocks listed in Hong Kong and the mainland will rise in the second half of the year.

They are betting on technology and consumer companies to continue to outperform in a post-pandemic world, while eyeing opportunities in beaten-down cyclical stocks.

China, the first nation to be plunged into the unprecedented Covid-19 crisis, and the first to emerge from it, is on a steady trajectory of economic recovery and provides more investment certainty, a scarcity while the rest of the world is still grappling with the disease, portfolio managers say.

“China’s economy is steady and in a clear direction of rebounding,” said William Yuen, investment director at asset manager, Invesco, in Hong Kong. “We prefer companies with more exposure to China.”

Upcoming improvements in corporate earnings will boost Chinese stocks, if the economic recovery is sustained as expected, said Michelle Qi, chief investment officer for equities at Eastspring Investment China. The firm forecasts China’s gross domestic product will post 3 per cent annual growth this year, modest in comparison to previous years, but a rare beacon of light in a gloomy global economy.

Meanwhile, the valuations of Hong Kong and mainland China-listed stocks remain attractive for bargain hunters. The price-to-earnings ratio, a key yardstick, for the Hang Seng Index stands at 10.7 times, near to a historical low.