Chinese stocks get upgraded as bear-market risks seen tempered by state buying support
- Canadian research firm says Chinese stocks could fall less than global peers in a bear market slump
The firm upgraded Chinese onshore equities to overweight from neutral within its global and emerging market (EM) allocations, according to a report on Wednesday. It lifted its allocation on their investible or offshore peers to neutral from underweight, saying any losses are likely to be limited in a sell-off.
“We expect Chinese stocks to fall by less than or as much as their global and EM peers in a bear market,” analysts including chief China strategist Arthur Budaghyan said in the report. Potential market support from Chinese state-owned funds could temper potential declines, he added.
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Why investors can expect more market volatility after recent global stock sell-off
Global stocks lost more than US$6 trillion in a sell-off on Monday. Risk assets have failed to overcome key technical resistances, BCA said, a breakdown that could lead into a bear market. This year’s rally lacked depth, as gains have been largely driven by big capitalisation stocks, BCA said.
