UBS give 3 reasons Chinese stocks look attractive now

<p>UBS are getting keener of Chinese stocks:</p><p>China Equity Strategy: How much is cheap enough? </p><ul><li>
MSCI China at record low valuation MSCI China has declined 10% YTD, underperforming global markets by 8%, and is currently trading at 8.2x forward P/E – on par with previous troughs reached since 2014. </li><li>Historically if investors bought into the MSCI China index at this valuation multiple, they would have generated an average return of 12% in one week. </li><li>As global equities have benefitted from lower interest rate expectations, MSCI China is now also trading at record discount vs MSCI World and EM. </li><li>While recent economic indicators have not shown a material improvement, they have certainly not shown the level of deterioration that has been exhibited by the equity market. </li><li>Looking at the FX, commodity and fixed income markets, it would seem that equity investors are pricing in a more pessimistic outlook on the domestic economy than investors in other markets. </li><li>With trough valuation multiples, light investor position and potential support from the 'national team', we believe risk reward is attractive at this level.</li></ul><p>***</p><p>Earlier posts related to this:</p><ul><li><a href="https://www.forexlive.com/news/chinas-sovereign-wealth-fund-says-it-will-help-with-market-stabilization-in-2024-20240116/" target="_blank" rel="follow" data-article-link="true">China's sovereign wealth fund says it will help with market stabilization in 2024</a></li><li><a href="https://www.forexlive.com/news/chinas-largest-brokerage-has-placed-restrictions-on-short-sales-20240119/" target="_blank" rel="follow" data-article-link="true">China's largest brokerage has placed restrictions on short sales</a></li></ul>

This article was written by Eamonn Sheridan at www.forexlive.com.