3 Stocks Worth Buying During China's Stock Market Crash

Given the crash in the Chinese A-shares markets in recent weeks, Nomura investors have been asking what stocks they should buy during this period of weakness in China. In a new report, analyst Wendy Liu discusses three China-listed stocks that Nomura believes investors should be buying on the dip.

Sectors
Although the China pullback has certainly created its fair share of buying opportunities, Liu believes that stock selection remains critical. For example, Nomura’s Macau gaming analysts maintain their bearish outlook. However, Nomura is calling for “in-line to better” near-term results versus consensus for tech, Internet, property and logistics stocks.

Outlook
Nomura’s long-term outlook for China is decidedly bullish. The firm has a full-year target range for the MSCI-China of 66-90 and predicts that Chinese equity indices could surge significantly higher by the mid-August interim results period. “We expect th index to finish the year higher than its April peak and that the current bull market in the MSCI-China will peak in 2017,” Liu explains.

Top picks
In light of Nomura’s bullish take on China, the recent pullback has provided investors with a second chance to get in on some of the firm’s favorite stocks at relatively low prices. Liu recommends three Chinese-listed stocks in the report.

Liu’s first pick is ZTE, China’s second-largest telecom equipment and system provider, which topped Nomura’s estimates by reporting 22 percent year-over-year (Y/Y) profit growth in the first half of 2015.

Nomura’s second pick is Hikvision, China’s largest provider of surveillance cameras, which recently reported an incredible 63 percent Y/Y jump in revenue in the first half of the year.

Finally, Nomura’s top income pick is Shenzhen International, a state-owned enterprise (SOE) with an attractive valuation and a dividend yield above 3.0 percent.