12month4On Monday, Morgan Stanley upgraded its rating of Chinese stocks from 'neutral' to 'overweight'.2021year1Since the beginning of the month, Morgan Stanley has beenMSCIChina's index has maintained a neutral rating, which is also the first upgrade in two years. Recently, several internationally renowned investment banks such as Goldman Sachs, JPMorgan Chase, and Citigroup have raised their expectations for Chinese stocks, with bullish voices continuing to grow.
Overallocation of foreign capital, including Goldman SachsAWhat are the positive implications of stocks? From an economic fundamentals perspective, what changes have taken place in global asset allocation? Compared to other countries, where does the attractiveness of Chinese assets lie? Considering liquidity andAFrom the perspectives of stock valuation and two other aspects, where does the medium- to long-term investment value of Chinese assets lie? Frost & SullivanFrost & SullivanXu Biao, Executive Director of Frost & Sullivan Greater China, was interviewed by Securities Daily to discuss the above topics.
Securities Daily
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Securities Daily Reporter: Many foreign-funded institutions including Morgan Stanley are overweightAWhat are the positive implications of stocks?
Many foreign-funded institutions including Goldman Sachs are overweight.AThe stock market reflects foreign investors' optimism about the medium- and long-term investment value of China's economy and assets, conveying positive information about the prospects for economic recovery. Recent adjustments by foreign institutionsAThe signal of overvalued stocks is not only conducive to enhancing the status and influence of China's capital market in the global market, but also demonstrates the global competitiveness of leading Chinese enterprises.
As foreign capital continues to pour into China's capital market, it represents that overseas capital will pay more and more attention to high-quality Chinese enterprises. Leading Chinese enterprises with global competitiveness will gradually be recognized by overseas capital. Taking the domestic semiconductor industry as an example, thanks to the state's support for tackling key technologies in chip manufacturing equipment and driven by the demand for capacity expansion at downstream wafer factories, domestic semiconductor equipment production has significantly increased in recent years, and the localization rate of the semiconductor industry has also gradually climbed. As a result, a group of outstanding enterprises with global competitiveness have emerged in China. With the overallocation of foreign capitalAShares, and these Chinese leading enterprises are bound to be sought after by foreign capital.
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Securities Daily Reporter: From an economic fundamentals perspective, what changes have occurred in global asset allocation? Compared to other countries, where does the attractiveness of Chinese assets lie?
From the perspective of global asset allocation, stock markets in multiple countries represented by the US market may face pressure due to central bank tightening. With the expectation that economic recession risks remain, the returns and attractiveness of domestic capital markets will weaken. Therefore, overseas capital will flow into more attractive capital markets.
Against this backdrop, China is expected to occupy a favorable position in global asset allocation. On one hand, the Chinese market offers a higher degree of diversification, which is more conducive to building a stable asset portfolio. On the other hand, against the backdrop of the Chinese government's adjustment of epidemic prevention policies, with the support of stimulative fiscal and monetary policies, the overall economic situation in China is expected to remain stable and improve, and the attractiveness of the Chinese market will steadily increase.
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Securities Daily Reporter: Combining liquidity andAFrom the perspectives of stock valuation and two other aspects, where does the medium- to long-term investment value of Chinese assets lie?
Currently, while monetary policies in overseas countries represented by the United States are gradually tightening, overall liquidity in China's money market remains loose. Moreover, at presentAEquity valuations have strong attractiveness, and the valuations of many industries are significantly undervalued. In the medium to long term, they are expected to gradually recover.
Combining with the development prospects of industries with Chinese characteristics, taking the semiconductor and new energy industry chains as examples, a number of enterprises with great medium- to long-term investment value have emerged. In the semiconductor field, with the cross-penetration of many disciplines such as computer science and microelectronics, innovative technologies such as new microelectromechanical system processes are expected to emerge in large numbers, thereby expanding the technical development direction of the semiconductor industry and giving China's leading semiconductor companies an opportunity to stand out. For the new energy industry chain, the continuously increasing electric vehicle range is expected to effectively alleviate consumers' 'range anxiety' and play a huge role in boosting the sales of new energy commercial vehicles and passenger cars. The development prospects of these emerging industries are long-term positive and represent a major manifestation of China's asset investment value.*This interview was published in 'Securities Daily', with the original title being "The "Over-provisioning"AThe stock market reached a consensus Several internationally renowned investment banks have cast their "trust votes". >> （👈Click the title to read the full report).
