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UBS: Strike balance between value cyclical and reopening beneficiaries in China

Khairani Afifi Noordin
Khairani Afifi Noordin7/28/2022 09:18 PM GMT+08  • 8 min read
UBS: Strike balance between value cyclical and reopening beneficiaries in China
China has seen nascent signs of recovery which includes 100 biggest property developers seeing new home sales up 61.2% MoM. Photo: UBS
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Investors should strike a balance between investing in China’s value cyclical and reopening beneficiary equities as the country shows nascent signs of recovery coupled with continued liberalisation, says UBS regional CIO Kelvin Tay.

These value cyclical stocks include those operating within the energy sector and selected names in telecommunications and banks, as well as metals, mining and construction materials. Meanwhile, the reopening beneficiaries include digital economy, consumption, automotive and electric vehicle supply chain, tech and industrial as well as renewable energy counters.

Speaking at the bank’s 2022 mid-year outlook presentation on July 5, Tay says the best entry point for equities in general is in a stock market where the GDP and earnings growth has bottomed and recovering, stocks are cheap, investors are bearish and policymakers have turned stimulative. Where these criteria are concerned, China has certainly “ticked all the boxes”, he adds.

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