Analysts pointed out that the Chinese market is still waiting for earnings to improve regardless of whether tariffs are imposed. Aaron Costello, head of Asia at Cambridge Associates, said on Thursday that “no matter how many tariffs are imposed on China, the question comes down to China’s domestic stimulus measures and whether China can alleviate deflationary pressures.” Costello said , Beijing “has clearly demonstrated its desire to stimulate the economy,” noting that details will be announced at the annual parliamentary session in March. “The potential for a sharp rebound in Chinese stocks is there, so we don’t want to underweight Chinese stocks, we want to remain neutral,” he said. Chinese stocks closed higher on Friday after U.S. President Donald Trump’s latest comments suggested he was unwilling to raise tariffs, despite threatening a day earlier to impose 10% tariffs as soon as February 1. Mainland stocks also got a boost on Thursday after the action. Laura Wang, chief China equity strategist at Morgan Stanley, said in a note on Thursday that while the order provides long-term support for the stock market, “we reiterate our support for the A-share market and stocks with stable cash returns and decent dividend yields.” preference”. She pointed to the company’s Jan. 20 report, which listed “well-positioned” names. Morgan Stanley conducted a survey of analysts on the Chinese stock market and they expect the Chinese stock market to see steady profit growth in the coming year. The stocks must be rated “overweight” or “equalweight,” have a market capitalization of more than $2 billion, and average daily trading volume of more than $2 million. The three companies with the highest expected profit growth in 2025 are: Espressif Systems — This Shanghai-listed company develops chipsets for home appliances. Earlier this month, the company said it would more than double net profit in 2024. SICC — Founded in 2010, this Shanghai-listed company produces silicon carbide substrates for semiconductors. The company said in December it planned to list in Hong Kong at an unspecified date. Zijin Mining – The Hong Kong-listed miner that mines metals such as copper, gold, zinc and lithium said third-quarter net profit rose more than 50% year-on-year. Morgan Stanley expects each company’s earnings per share to grow by at least 40% by 2025. Alpha creators and should continue to be so”. They said that since the end of 2021, China’s stock market has missed profit expectations for 13 consecutive quarters. The earnings beat and upward revisions led to significantly better-than-expected performance. As the domestic economy slows, overseas revenue has increasingly become a growth driver for Chinese companies. Despite concerns about a geopolitical crackdown on cross-border e-commerce, analysts at Bernstein noted in a note on Wednesday that the market outside the United States is “as big, if not larger, than the U.S. market.” Bernstein said that the total merchandise value of U.S. e-commerce in 2023 will be $1.1 trillion, while the total GMV of the next 29 markets for which eMarketer has data will be $1.5 trillion. Bernstein analysts expect earnings from Pinduoduo and Alibaba to grow in the coming year, but they believe the only one to outperform is Temu’s parent company. They set a price target on PDD of $150 per share, an increase of more than 40% from Thursday’s closing price. “From an investment perspective, our sense is that global (particularly U.S.) investors have a very U.S.-centric view of Temu and what it means for PDD stock,” the analysts said. “In contrast, We think Temu’s experience in the U.S. over the past 12-18 months – a huge jump in profitability once the emphasis on new user acquisition is removed – shows the path to profitability elsewhere.” — CNBC’s Michael Bloom contributed to this report. contributed.
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