- HSBC Holdings, plc HSBC Noted that prospects for some Chinese industries, from internet to real estate, have improved as they have discounted much of the bad news.
- HSBC identified four sectors in China that appear promising, Bloomberg reports.
- Sectors included internet companies with unexpected earnings growth, developers benefiting from significant industry consolidation, renewable energy companies blessed with favorable policies, and consumer goods manufacturers benefiting from changing demographics.
- Also read: Alibaba has 63% upside potential and room for margin expansion, according to upbeat analysts
- Alibaba Group Holding Limited BABA, Baidu, Inc BIDUand Tencent Holding Ltd TCEHY are known as the Chinese tech titans. Other significant companies are JD.com, Inc JD, NetEase, Inc NTES, meituan MPNGYand ByteDance Ltd.
- China’s popular real estate companies include China Evergrande Group EGRNF and Sunac China Holdings Limited SCCCF.
- Analysts at HSBC highlighted a clear disconnect between the gloomy macroeconomic picture and the more positive bottom-up view of Chinese equities. Also, most funds are underweight and valuations are cheap.
- The report added that HSBC’s more optimistic view of selected industries comes despite the slashing of year-end targets for benchmark indices for both Hong Kong and mainland equities, with the underestimation of factors ranging from stubborn US inflation to China’s stringent COVID controls.
- HSBC maintained an overweight stance on Chinese equities but lowered its target for late 2022 Hang Seng Index and the CSI300.
- Price promotion: BABA shares closed up 4.01% at $80.99 on Wednesday.
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