Investing.com: Citi Analysts Bullish on Chinese Stocks Despite Recent Rally
In a recent report, Citi analysts expressed optimism about Chinese stocks, highlighting significant upside potential even after a recent rally to year-to-date highs. The Chinese government's announcement of economic stimulus measures has bolstered Citi's China equity strategy team's bullish stance, with expectations of further gains as more stimulus packages are anticipated.
Citi forecasts the introduction of a RMB3 trillion consumption support package by the government, which, combined with the recent stimulus, is expected to have a positive impact on Chinese equities. The analysts emphasized that Chinese equity valuations are still relatively low compared to emerging market stocks, indicating room for further growth, especially as the economy receives continued support.
The bank has revised its end-June 2025 targets for major Chinese stock indexes, projecting significant increases. They anticipate the to reach 26,000, the CSI 300 to hit 4,600, and the Index to climb to 84. This upward revision underscores the potential for continued gains in the Chinese market.
Looking ahead, Citi believes that the upcoming results season from mid-October to early November could lead to upward revisions in FY25 earnings forecasts, providing additional momentum for Chinese equities. The bank also sees the Chinese economic stimulus as a positive factor for Japanese stocks, particularly for companies with high exposure to China or a strong correlation with Chinese stocks.
Analysis:
In summary, Citi's bullish outlook on Chinese stocks is based on the government's economic stimulus measures and the potential for additional growth in equity valuations. The projected increases in major Chinese stock indexes indicate a positive trend for investors. The upcoming results season may further boost market performance, and Japanese stocks with ties to China are also expected to benefit. Overall, this report suggests that investing in Chinese and related equities could offer significant opportunities for investors seeking growth in their portfolios.