Sunil Koul, Asia-Pacific equity strategist at Goldman Sachs, shared his analysis of the recent rise in Chinese equities, indicating that this positive trend could continue for some time. He noted that the MSCI China index has risen by a significant 14-15% since its low point in April, and by more than 30% since January. Despite this growth, valuations remain low, with a P/E of 10x, making the MSCI China one of the most affordable markets in the region.
Investors, including hedge funds and traditional investors, have not yet invested heavily in China, suggesting potential for growth. Koul has seen growing interest in investing in China during his recent visits to the US and Europe, with increased allocations and interest in call options.
He notes that North Asian markets, such as Japan and Korea, as well as economies closely linked to China, such as Australia and Brazil, are attracting more capital. In terms of earnings prospects, despite downward revisions, fourth quarter results were better than expected and GDP growth forecasts for the first quarter have been revised upwards.
Some key sectors, such as technology and internet, are starting to see upward earnings revisions, which could support the continuation of this trend.
Bloomberg TV provided by MT Newswires
