Stocks of companies with attractive fundamentals, less affected by macro-risk factors, and relatively low valuations should be favored. Italian "Milan Finance Weekly" reported that most economies in the world appear to be entering a recession, but the Chinese economy is showing i

Nicholas Yeo, head of Asian equity investment at Abrdn, said that Chinese stocks are trading below historical value and other market prices. Stocks of companies with attractive fundamentals, less affected by macro-risk factors, and relatively low valuations should be favored.

Italian Milano Finanza reported that most of the world's economies look to enter a recession, but the Chinese economy is showing its resilience. Nicholas Yeo, head of equity investment at Amben Asia, said that China's stock trading prices are lower than historical value and other market prices, especially compared with Wall Street . Meanwhile, while China's economic growth is slowing compared to last year - China's economic growth is 8.1% in 2021, and Ambrosco's economists predict China's economic growth will be 2.8% in 2022 - experts believe the difficult situation is changing. Experts say that through selective investment, there are enough reasons to be relatively optimistic about the outlook for the Chinese stock market.

article clarifies the reasons for optimistic about the outlook for China's stock market from the following three aspects:

1, a more flexible epidemic zeroing policy

In the past, China's epidemic zeroing policy played a key role in significantly reducing new cases. Now, policy seems to be entering a new stage of adopting more targeted and less stringent lockdown measures. From the perspective of China's national regulatory policy, there are also signs of pressure relief. For example, in June, the logistics platform Manbang and the online recruitment platform BOSS Direct Recruitment both announced that the number of customers was increasing.

2, the more favorable monetary and fiscal environment

Compared with the global monetary and fiscal environment, China's environment seems to be more favorable. China does not need to worry about inflation , with China's inflation rate in August only 2.5%. Without price pressure, PBOC can support the economic recovery by lowering interest rates, providing new credit, and reducing the amount of currency used by banks as reserves.

There are also good news in the finances. Experts at Amben estimated that efforts by local governments to issue bonds could significantly increase infrastructure construction spending.

3, the valuation discount of Chinese stocks

last point is the valuation of Chinese stocks. MSCI China Index 's price-to-earnings ratio (p/e) is 10.8, significantly lower than MSCI US Index 17.1 and MSCI All World Index 14.6.

To sum up, experts believe that more selective epidemic lockdown policies, easing regulatory pressures, relatively loose monetary and fiscal policies, and relatively low stock valuation are enough to keep us optimistic about the prospects of the Chinese stock market.

But experts also point out that while staying optimistic, appropriate risk assessment is also required. First of all, the policy of clearing the epidemic has not yet ended completely, and a new lockdown is still possible. In addition, the real estate industry, which accounts for about 25-30% of China's GDP 3, is still vulnerable to negative news.

Therefore, experts recommend adopting a selective investment strategy to select stocks of Chinese companies that are attractive in fundamentals, have low macro risks, and have low valuations.