Chinese Analysts' Stock Picks From Party Congress
Covering nine sectors and dozens of stock ideas
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A few days ago, I summarized the Chinese analysts’ views (sell-side research) on the Communist Party Congress. Today I bring to you their sector views and stock picks.
To be clear, the following are third-party views not necessarily my takes. Our goal here is to broaden horizons and avoid being blind-sided. We do not offer investment advice, nor should you follow any recommendations without due diligence. Make sure you read the Disclaimer at the end.
Sell-side research is like a diet pill. It works for some people but may not work for everyone. You decide yourself if and how to use my summary below. Ultimately you need to do your own work to make any investment decision.
We cover nine sectors here: financials, real estate, internet & media, healthcare, domestic consumption, information technology, semiconductor, new energy, and aerospace & defense. Warning: this is a long report.
Financials
Not much related research on financials. The investment implications from the Party Congress on financial services are not that obvious.
Zheshang Securities believes China’s structural reforms will effect structural changes in banking. The rising social safety net will create new financial product opportunities. China may further “optimize” its real estate policy, which will reduce the banks’ non-performing loan (NPL) formation.
Zheshang is positive on Chinese banks. It recommends small local players like Bank of Nanjing (601009.SH) and Bank of Ningbo (002142.SZ), along with mid-size banks like Ping An Bank (000001.SZ) and Industrial Bank (601166.SH).
Donghai Securities is relatively cautious on the banks, given the narrative that the financial sector should “give way” to the real economy. Financials accounts for 8% China’s GDP and is one of the fastest growing sectors. Perhaps too fast for its own good in the eyes of regulators.
Great Wall Securities and Dongxing Securities are both constructive on the brokerage industry, due to continuing growth in wealth management, capital market reforms and more direct financing. Great Wall likes East Money (300059.SZ) and Huatai Securities (601688.SH, 6886.HK), while Dongxing recommends Citic Securities (600030.SH, 6030.HK). Please note brokerage stocks can be extremely volatile.
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