China is opening up again and investors are ready for it. After a bloody 2022, hedge funds have added positions in Chinese stocks. Net exposure to Chinese equities has risen to around 13% from a low of 7%, according to analysis by Goldman Sachs. The peak was reached in 2020 at 15%. “Reopening story aside, valuations still look attractive,” said Kevin Carter, chief investment officer of the Emerging Markets Internet & Ecommerce ETF (EMQQ). Carter notes that despite China’s outperformance this year, the MSCI China ETF is trading at 12 times earnings, compared to a Nasdaq valuation at 22 times earnings. MCHI 1Y Mountain iShares MSCI China ETF on the move Stocks to play it Wall Street remains bullish on names like Alibaba and Baidu, but analysts are increasingly keen to find companies benefiting from increased consumption and local activity in benefit China. HBSC analysts recommend Yum China, saying the company will benefit as restaurants reopen. Others on her list: Budweiser, with “the fastest growth in our beer coverage,” wrote HSBC consumer analyst Lina Yan. And Luzhou Laojiao, “as we believe it will continue to gain market share in the sub-premium baijiu market,” Yan adds. Luzhou Laojiao is traded on the Shenzhen Stock Exchange. Following Nike CEO John Donahue’s comments on the strength of the Chinese consumer, Cowen & Co analyst John Kernan names Adidas as a beneficiary. In China, HSBC likes sportswear company Li Ning. With the Lunar New Year approaching, BTIG travel analyst Jake Fuller upgraded his estimates for Booking Holdings for the first quarter, citing “strong trends so far in January” and “China’s reopening”. However, according to experts, it will take some time to return to pre-Covid levels. A new survey by Dragon Trail International found that 60% of Chinese plan to travel abroad this year, but about 40% have no plans for 2023. More than half of those not planning to travel cited financial limitations due to Covid, while others raised concerns about their health.
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/cloudfront-us-east-1.images.arcpublishing.com/pmn/5S5XQTTOTZEZBMO5AFZJKRSSKE.jpg?resize=100,70 "Business travel ramped up in the air, but remote work was still a factor")
