Foreign investors are actively optimistic about A-share opportunities! If valuations are considered cheap enough, market sentiment may be boosted

Since the beginning of 2024, A-shares have continued to adjust. However, recently many foreign investment institutions have given positive judgments on investment opportunities in China's stock market in 2024.

Looking forward to 2024, as economic growth is expected to stabilize, JP Morgan Asset Management predicts that the pressure for downward revisions to profit forecasts is expected to ease, and the monetary easing policy is gradually implemented, and A-share market sentiment may be boosted to a certain extent. In addition, industrial companies are expected to enter the market in the first quarter. During the inventory replenishment stage, sectors and targets in the market with stable profit prospects may have room for upside.

Morgan Stanley Fund believes that the core variable is the progress of domestic policy efforts. The issuance of trillions of treasury bonds that began at the end of last year is expected to continue this year, and the possibility of continued fiscal increases is still high. From a rhythm perspective, it may be difficult for policy effects to appear quickly in the first quarter of this year. Therefore, the profit growth rate of listed companies is not expected to be high, but the probability of subsequent quarterly increases is higher.

"For China's economy in 2024, we expect that the growth rate will still remain stable, trillions of national debt will form a considerable amount of physical work, and exports are also expected to come out of the trough. This may have a large expected gap, and the probability of northbound capital return will increase, which is expected to It will play a very good role in boosting the A-share market." Morgan Stanley Fund said.

According to reports, Ned Bel, chief investment officer of Bell Asset Management, who has long avoided Chinese stocks, recently made a rare statement saying that he is considering buying large Chinese technology companies including Tencent Holdings. "We are selectively discovering value."

Ned Bell said that the current valuation of China's stock market is close to its lowest level in history. The MSCI China Index has fallen by about 60% from its peak in 2021, and the forward price-to-earnings ratio is less than 9 times. By comparison, the MSCI India Index trades at a forward P/E ratio of 22 times and the S&P 500 Index trades at 19 times.

It is reported that Bell Asset Management is headquartered in Melbourne, Australia, and manages global stocks worth approximately A$5.1 billion (approximately RMB 24.3 billion). It is worth mentioning that the last time the company held mainland China stocks was back in December 2014.

Sylvia Sheng, global multi-asset strategist at J.P. Morgan Asset Management, also said: "The current valuation of Chinese stocks is certainly very attractive, and the position seems to be quite light. We have seen the macro momentum stabilizing, and we think this will gradually Promote the earnings downward trend to re-stabilize."

Louis Luo, head of multi-asset investment solutions for Greater China at Aberdeen Asset Management (Abrdn), said: "We have remained neutral for the past three quarters, but now we are starting to see value in the Chinese stock market. We are currently considering buying some upside protection in case The stock market surge affects the relative performance of emerging market funds."

Willem Sels, global chief investment director of HSBC Global Private Banking and Wealth Management, predicts that proactive fiscal and monetary policies will promote China's steady GDP growth in 2024.

Specific to the sector, Sels said that investors are expected to find opportunities in the fields of consumption, Internet, tourism and new energy vehicles.

Morgan Asset Management suggests that sectors with growth logic and low correlation with the economic cycle deserve attention. Currently, the structure of China's manufacturing industry is changing, and the new generation of general technological innovation in artificial intelligence may mean more investment opportunities, such as AI supply side, AI application side (smart cars, humanoid robots, office applications, entertainment, etc. ); Emerging industries such as new energy, electric vehicles and advanced manufacturing continue to receive policy support and are also internationally competitive. Overseas demand may provide a source of profit. Driven by the cyclical recovery of consumer electronics, the replacement of AI-powered mobile phones and PCs, and new product cycles such as MRAR, the triple logical resonance may bring about this year’s sectoral market conditions.

Morgan Stanley Fund pointed out that the current market may be in a state of bottoming out, and dividend assets are expected to perform better; from a medium- to long-term perspective, the technology sector, which is in line with technological self-reliance and self-reliance and truly benefits from the rapid development of the AI industry, maintains a high level of prosperity and The high-end manufacturing sector, which benefits from continued policy tightening, deserves attention.