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Goldman Sachs, UBS, BNP more positive on Chinese stocks as chorus of favourable sentiment grows in run-up to July plenum
- Goldman analysts say A share valuations may rise by 40 per cent, while UBS raised its rating on the MSCI China Index and Hong Kong stocks to overweight
- DBS Bank says valuation gap between Hong Kong stocks and US stocks has reached the widest on record
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Investment banks including Goldman Sachs, UBS and BNP have become more positive on stocks in China, with foreign selling having subsided.
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Foreign investors were net buyers of Chinese stocks for a third straight month in April, the longest streak of foreign buying in a year. Global emerging market funds rolled back their underweight position on mainland China stocks and turned neutral, HSBC said in a report last month.
Some international hedge funds have shifted their investment positions from US or Japan stocks to China stocks over the past week, Japanese investment bank Daiwa Capital Markets said in a report.
Goldman Sachs said changes are afoot in China that point to a potentially stronger risk appetite and a more conducive trading environment for A shares in the near term, after China’s State Council, or cabinet, issued a nine-point guideline last month to prop up the US$9 trillion stock market.
The new guidelines stress the quality of listed companies, regulatory supervision and investor protection, marking a shift from a focus on development in previous policy frameworks.
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