With all eyes on China right now, one fund manager is bullish on China and says investors should get involved in any “bazooka” stimulus package. Stephen Glass, managing director and analyst at Sydney-based Pella Funds Management, said the Chinese market would continue to improve regardless of the announcement of a major economic stimulus package. Starting September 24, China announced a series of economic stimulus measures aimed at revitalizing the Chinese economy. However, investors were disappointed at Tuesday’s National Development and Reform Commission meeting as no major new measures were announced when markets reopened after the Golden Week holiday. After the stimulus package was announced on September 24, the mainland’s CSI300 index rose about 16%, its best week since 2008. The blue-chip index is up nearly 20% since the beginning of the year. The focus is on Saturday, when the country’s finance ministry is scheduled to hold a press conference on fiscal policy, as hopes for further economic stimulus rise. But Glass said the government’s gradual steps were enough to boost investor confidence in the country and ensure continued capital flows into the market. He said the main reason for China’s poor market performance in recent years is the government’s crackdown on businesses that began in 2020. This caused mainland China’s CSI300 index to decline for the third consecutive year, dropping by 11.4% in 2023. Meanwhile, Chinese and Hong Kong stocks sold a market capitalization of $4.8 trillion from 2021 to April this year, according to HSBC research. But Glass pointed out that there hasn’t been any “passive” government efforts in China since around September 2023, and that “people should take a very serious look at China” last week on CNBC’s “Squawk.” Box Asia”. The fund manager oversees the Pella Global Generations Fund, a long-term equity fund that invests in 30 to 50 businesses with strong ESG ratings and high cash flow generation. . His optimism about China is in stark contrast to the cautious stance of some other investors and analysts. For example, former Morgan Stanley chief economist Stephen Roach warned investors not to get too swayed by the Chinese market’s rally. ‘Starting point’ For those considering investing in China, Glass said Midea Group, which makes home appliances and industrial robots, is a good “starting point.” “It’s well-priced, well-managed and has a very strong balance sheet,” he said, adding that the company would benefit “from increased consumer spending and an improving real estate market.” Ta. Midea acquired German robot supplier Kuka in 2016, which Glass said is positive, as industrial robots are “a very good place to invest…as the main beneficiary of AI.” It is captured in Midea shares are listed on the Shenzhen Stock Exchange and are included in the Leilian Quantamental China Stock ETF (weight 2.9%). Midea also made its biggest debut for the Hong Kong Stock Exchange since February 2021 on September 17, with the Hong Kong-listed stock up 54% since listing. All 26 analysts covering the stock have a buy or overweight rating, with an average price target of HK$92.39 ($11.89), according to FactSet data. This could push the stock price up by about 9%. Investing in Chinese real estate Investors with a higher tolerance for risk may consider Country Garden Services Holdings, the property management arm of real estate company Country Garden, Glass said. The company was spun out and listed on the Hong Kong Stock Exchange in June 2018, and Mr Glass said it could deliver “absolutely amazing results (and) be a 5x to 10x bagger (up to 10x in value)”. I believe that we will see a rise in the future. The stock also trades in the United States as an American Depositary Receipt under the ticker CTRGF. The company’s Hong Kong stock has been relatively flat since the beginning of the year. Of the 19 analysts covering the stock, seven have a buy or overweight rating, six have a hold call and six have a sell or underweight rating, according to FactSet data. . Analysts’ average price target is HK$4.49, meaning the stock could fall nearly 30% from its current price of around HK$6.40.
