Tariffs or not, the Chinese market is still waiting for earnings to turn around, analysts say. “Regardless of the number of tariffs on China, it comes back to China’s domestic stimulus and whether China can alleviate deflationary pressures,” Aaron Costello, head of Asia at Cambridge Associates, said on Thursday. “Beijing has made clear its desire to stimulate the economy,” Costello said. “We don’t want to be underweight China, we want to be neutral because Chinese stocks could rebound sharply,” he said. U.S. President Donald Trump’s latest comments threaten to raise tariffs even as he threatened on February 1st that 10% duty cuts could occur immediately It was shut down on Friday after showing reluctance. Mandated state-backed insurance companies to buy more shares. While the directive offers long-term support for stocks, “we reiterate our preference for the A-Share market and stocks with stable cash returns and decent dividend yields,” says Morgan Stanley’s chief China equity strategy. Laura Wang of the home said Thursday. She referred to the company’s report on January 20 for a list of “well-positioned” names. Morgan Stanley surveyed analysts on Chinese stocks, expecting solid revenue growth over the coming year. Stocks must be rated overweight or equal and have a market capitalization of $2 billion or more and average daily trading turnover of more than $2 million. The three names with the highest expected revenue growth in 2025 are: Espressif System – Shanghai listed company develops chipsets for home appliances. Earlier this month, it said its net profit would more than double in 2024. SICC – A Shanghai-listed company founded in 2010, produces silicon carbide substrates used in semiconductors. In December, it said it planned to list on an unspecified date in Hong Kong. Zijin Mining – a Hong Kong-listed mining company that extracts metals such as copper, gold, zinc and lithium, said third-quarter net profit rose more than 50% from a year ago. Morgan Stanley expects each company to be able to increase its earnings per share by at least 40% in 2025. They said Chinese stocks missed earnings expectations for the 13th quarter of the second half of 2021. However, in our historical analysis of stock performance from 2021 to 2024, we find that earnings beats and upward revisions lead to significant outperformance for companies whose earnings estimates have been reduced or trimmed. . Overseas revenues are increasingly becoming a growth driver for Chinese companies due to the slow economy at home. And despite worries about geopolitics colliding with cross-border e-commerce, Bernstein analysts said in a note Wednesday that markets outside the U.S. are “larger, if not larger, than the U.S.” he pointed out. U.S. e-commerce total gross merchandise value was $1.1 trillion in 2023, while eMarketer’s next 29 markets had a combined GMV of $1.5 trillion. Bernstein analysts expect PDD and Alibaba’s revenue to grow in the year ahead, but the only company they see outperforming is Temu’s parent. They have a $150 per share price target on PDD for an increase of more than 40% from Thursday’s close. “From an investment perspective, our sense is that global (especially US) investors have a very US-centric view of Temu, and what that means for PDD stock. ” said the analyst. “In contrast, we see Temu’s US experience over the past 12-18 months – which has shown a significant jump in profitability after an emphasis on new user acquisition – compared to revenue elsewhere. – CNBC’s Michael Bloom contributed to this report.
