In the eyes of foreign-funded institutions, where are the investment opportunities in China in 2023?

(Investing in China) In the eyes of foreign-funded institutions, where are the investment opportunities in China in 2023?

　　China News Agency, Beijing, January 12 (Reporter Xia Bin) In the beginning of 2023, the heads of major ministries and commissions in China have intensively spoken out, and various localities are intensively planning to boost the economy. Looking forward to China's economic situation has also become the focus of foreign-funded institutions in the near future. issue.

Where do they see investment opportunities in China?

　　Many institutions believe that the improvement of the real estate market and the boost of consumption will help stimulate the economy.

Manraj Sekhon, chief investment officer at Franklin Templeton Global Investors, said the turning point in China's economic policy began last October when credit access for the real estate sector was eased.

The optimization of the Chinese government's anti-epidemic policies also catalyzed the turning point.

The policy focus has been refocused on promoting growth and boosting consumer confidence.

For the market, this turnaround is crucial.

　　Chen Dong, director of Asian macroeconomic research at Pictet Wealth Management in Switzerland, believes that China's economy will rebound moderately in 2023.

　　He believes that at the end of 2022, the Chinese government will introduce a series of new measures aimed at providing credit support for real estate developers.

These measures are the strongest policy support since the end of 2021, when the real estate market continued to bottom out.

While a massive rebound in the housing market is unlikely for structural reasons, it could help stabilize the housing sector in the coming months.

　　UBS Asia Economic Research Director and Chief China Economist Wang Tao said that in 2023, China's economy is expected to recover from the impact of the epidemic and consumption will recover.

In the past three years, the savings rate of the Chinese people has increased by 3 to 5 percentage points.

After getting out of the epidemic, people can release the backlog of savings, and some previously expected demand will be gradually released, which will become the main driving force for the rebound in consumption this year.

　　She also expects that China's real estate activities will stabilize in 2023 and the negative impact on the economy will be reduced.

It is expected that real estate sales volume and newly started area will bottom out in the next one or two months, and will start to rebound month-on-month in March and April this year (after deducting seasonal factors).

Throughout the year, real estate sales and newly started areas have gradually recovered from the current trough, and the month-on-month growth may reach double digits.

　　Can the Chinese stock market, which will perform poorly in 2022, fight a "turnaround" this year?

Xu Fei, Head of Alternative Investment and Multi-Asset Strategy of Pioneer Quantitative Equity Team, believes that in terms of the stock market, although the valuation of US stocks is more attractive than that in 2022, it is still slightly higher than the fair value estimated by the Vanguard model.

By contrast, Chinese stocks are particularly attractive right now.

　　The Goldman Sachs strategy report raised the 12-month target of the MSCI China Index from 70 points to 80 points, mainly due to the low overall valuation and multiple support points in the fields of real estate and Internet regulation.

Morgan Stanley also raised the target for the MSCI China Index by the end of 2023 to 80 points.

　　Wang Ying, chief market strategist at Morgan Stanley China, believes that China's GDP and corporate profits will accelerate growth in 2023, and the Chinese stock market is expected to become the best performing stock market in the world.

According to its research report, China's GDP and corporate profits will accelerate growth in 2023, while both internal and external risks will decline, which may drive stock valuations to rise further.

　　When further raising the target of the MSCI China Index, Morgan Stanley stated that it is re-evaluating China's equity risk premium (ERP), and many factors prove that the bull market cycle belonging to A shares has begun.

　　Against the global backdrop to 2023, China looks well-positioned for economic growth, policy and inflation cycles, according to the Goldman Sachs strategy team.

"The current market backdrop leads us to believe that continuing to underweight or short Chinese equities is significantly riskier than long Chinese equities."

　　In 2022, there will be a rare inversion in the interest rates of the 10-year treasury bonds between China and the United States, disturbing the financial market.

Xia Minmin, a China interest rate market strategist at UBS Securities, predicted at a seminar recently that in 2023, with the restoration of the inversion of the interest rate gap between China and the United States, the strength of the US dollar relative to other currencies will be reversed, and the demand for foreign institutions to allocate RMB bonds is expected to resume .

　　Xia Yinmin believes that in the first half of 2023, China's economic growth is expected to rebound, the yield of government bonds may further increase, and the spread between the yield of government bonds and the policy interest rate may further expand, and the high point will reach about 3.25%. In the second half of the year, China's government bond yields may have the opportunity to fall again, and may fall further at the end of the year, which is expected to be around 2.9%.

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