Chinese stocks in bear market upgraded by Credit Suisse strategists on policy easing, valuation appeal
- Chinese stocks fell into bear territory this week from a peak in February on a combination of factors including tech crackdown and economic headwinds
- Credit Suisse reverses downgrade calls in November 2020 and February 2021 that helped investors sidestep sell-off
The Swiss investment bank raised its recommendation to overweight from market weight relative to global benchmarks, and to market weight from underweight in its Asia-Pacific strategy, according to reports published this week.
The decision reversed its downgrade calls in November 2020 and February last year, helping clients avoid steep losses in the world’s second-largest capital market. A combination of tech sector crackdown and economic slowdown triggered a trillion-dollar sell-off and sent the CSI 300 Index tumbling by more than 20 per cent from the peak in February.
“We see reasons for Chinese equities to potentially outperform, even if only on a tactical (three months) basis,” the bank’s London-based strategists wrote. Monetary policy is being eased and economic momentum is turning up while earnings revisions (relative to global markets) are troughing, they said. “Valuations look cheap.”