Citigroup analysts say some of the top candidates are high-yielding mainland stocks, as the Chinese market braces for higher tariffs and hopes for more government stimulus. “Amid falling government bond yields, yield trends in the A-share market have become more attractive,” Citi China equity strategists said in a note last week, referring to stocks traded in mainland China. The People’s Bank of China suspended government bond purchases on January 10 as the yield on China’s 10-year government bonds continued to fall, reaching an all-time low of about 1.58% this month. In the week since then, the yield has remained little changed at around 1.64%. Citi analysts believe China’s He said 10-year Treasury yields could fall further. 100 basis points each. One basis point is equal to 1/100th (0.01%) of a percentage point. Meanwhile, Hong Kong’s Hang Seng Index fell more than 8% from early December to mid-January, with the rise in U.S. bond yields at least partly driven by inflation expectations from U.S. tariffs, according to Citi. Mainland Chinese stocks held up after falling 6%, which Citi analysts blamed on monetary easing and lower Chinese government bond yields. Three of Citi’s top mainland Chinese stocks for yield are Shanghai-listed electric bus company Yutong Bus, and two Shenzhen-listed companies, Geli Electric and Ping An Bank. Ye Yuhua, a money manager at Guangzhou-based Liangdian Private Capital, said long-term investors have favored high-yield Chinese stocks for years, but slowing economic growth and falling bond yields have diminished that advantage. He said it has become clearer. Bank and consumer electronics stocks tend to yield between 4% and 6%, he said, well above the benchmark government bond yield of less than 2%. However, the concern is that high dividend yields are not always a given, especially for stocks that are sensitive to commodity prices. Revealing the impact of tariffs President-elect Donald Trump has vowed to impose additional tariffs of at least 10% on Chinese goods as soon as he takes office on Monday. Citi economists expect U.S. tariffs to go into effect in the second quarter and increase in stages by about 15 percentage points, reducing China’s exports by 6% and gross domestic product by 1. It is estimated that there is a possibility of a % decrease. “The key takeaway was that China is aiming for stable economic growth,” Citi analysts said, based on recent meetings with Chinese officials from several sectors. [on] Analysts expect a short-term stock rally in March if the U.S. and China reach an agreement to gradually increase tariffs, “but this could change China’s deflation outlook. , it is unlikely that the structural problems will be resolved.” Citi analysts said the company is expected to be a “high-yield bank stock.” [will] China reported on Friday that its GDP grew by 5% in 2024, in line with government targets. However, it pointed out that economic growth in 2024 will be only 4.2%, taking into account falling prices and other deflationary pressures. Macquarie chief China economist Larry Hu said whether policymakers were able to reverse nearly two years of deflationary trends would depend on the effectiveness of fiscal policy and support. Chinese authorities have promised to widen the budget deficit at their annual legislative session in March, when they are expected to unveil other stimulus measures — CNBC’s Michael Bloom reports Contributed to.
