Investors see a lot of appeal in Chinese stocks, but there are many naysayers who are considering the best ways to bet on a recovery in the world’s second largest economy.
About it writes The Wall Street Journal reports EP.
Following the lifting of tight lockdown restrictions, the MSCI China Index, which tracks Chinese companies listed in the US, Hong Kong and the mainland, is up about 30% The S&P 500 is up 1.2% over the same period.
Goldman Sachs forecasts the MSCI index to hit 85 by the end of the year, up more than 33% from Thursday’s close of 63.6.
UBS Group, meanwhile, is labeling Chinese equities as the “most desirable” of its global strategies.
One is China’s relationship with the US is deteriorating. In a worst-case scenario, sanctions like those imposed on Russia after the invasion of Ukraine could devalue the Chinese assets of American investors.
Thus, the MSCI index has fallen by about 15% since the end of January, when a Chinese spy balloon was first detected in US airspace.
One way to play on China’s recovery without betting directly on it, strategists say, is to invest in any of the major consumer brands with significant presence in the country.
Accordingly, the best options are Starbucks Corp., Nike Inc., Marriott International Inc. and French luxury giant LVMH Moët Hennessy Louis Vuitton.
Despite the timidity of some investors, money continues to flow into Chinese stock funds. Investors have already invested $8.2 billion in special China equity funds this year, according to EPFR, a fund flow data provider.
