Investors eye China stocks and energy sector amid economic and Covid-19 pandemic recovery
- Despite a sometimes fragile economic recovery, a regulatory crackdown and debt concerns, there is optimism that the rest of 2021 will end up in the green
- Mega-cap stocks may prove to be too expensive, under-discovered leaders in niche and fragmented industries could turn out to be good opportunities
This article was part of a special supplement on private banking which was published in the South China Morning Post print edition on October 20, 2021.
China stocks, equities in laggard markets and energy plays could emerge as interesting opportunities for investors in the last quarter of 2021, with the ongoing economic and pandemic recovery possibly helping to fuel some of these opportunities.
Mainland China plays are likely to remain a big focus for investors. Despite a sometimes fragile economic recovery, a regulatory crackdown and debt concerns, there is optimism that the last remaining months of 2021 will end up in the green.
“China’s stimulus is coming since it is the only way to avoid a cliff in growth in 2022. This should lift the Chinese and Hong Kong stock markets at least temporarily, maybe even globally,” said Alicia Garcia-Herrero, chief economist at French corporate and investment bank Natixis.
The People’s Bank of China added liquidity of 100 billion yuan (US$15.49 billion) on a gross basis each day for five consecutive sessions before the Golden Week holidays on October 1 to 7.
Also supporting the optimism, the National Bureau of Statistics’ non-manufacturing Purchasing Managers Index (PMI) in September showed a return to growth but, tempering that, the manufacturing PMI contracted unexpectedly and for the sixth month in a row.
