Investment Recommendations for China

Overview
Investing.com — Strategists at Evercore ISI are advising investors to build positions in China and China-exposed equities, seeing attractive valuations and policy support as key opportunities.

Current Economic Climate
According to Evercore strategists, China’s economic data is showing signs of stabilization, with future growth reliant on fiscal policy going beyond mere promises. They highlight the approaching NPCSC meeting as a potential catalyst for clarity on fiscal measures.

Investment Strategy
The strategists recommend that investors "build a China/China exposed position now," focusing on Chinese ADRs and US and European stocks with significant revenue from China, recognizing the potential for significant outperformance.

Importantly, Evercore states that China’s equity markets, including the Hang Seng Index, are among the cheapest globally, based on both absolute and relative measures.

Key Indicators to Monitor
Investors are encouraged to monitor key indicators to assess the effectiveness of stimulus measures, such as:
– Money supply growth
– Consumer confidence
– Property price stabilization
– Retail sales recovery

Recommendations
Strategists further recommend purchasing Chinese ADRs with favorable valuations and increasing earnings per share (EPS). They urge investors to seize market weaknesses, like negative reactions to the US election or a retest of the CSI 300 index peak, as buying opportunities.

The Evercore team notes that the chances for additional stimulus measures to be announced increase in these scenarios. US and European companies with significant revenue exposure to China, which are trading below their historical valuations, are also likely to outperform.

Market Performance
On Monday, Chinese stocks saw slight gains, largely driven by advancements in technology shares, as Beijing indicated fresh support for innovative tech firms and reduced benchmark lending rates.
– The CSI 300 index rose by 0.3%, and the Shanghai Composite Index increased by 0.2%.
– Conversely, Hong Kong's Hang Seng Index fell by 1.6%.

Recent Rate Adjustments
In its latest monthly adjustment, China lowered both its one-year and five-year loan prime rates (LPRs) by 25 basis points. While this move was anticipated, markets had largely expected a reduction of 20 basis points.