Here's Why Fund Managers Are Turning Bullish On Chinese Stocks For 2023

China relaxed some of its COVID-19 restrictions last week, following a public backlash to the country's rigorous "zero-COVID" policy.

As COVID rules are easing, fund managers are now bullish on Chinese stocks for 2023 and predict a rally for the equities, reports Bloomberg.  

According to a survey of 134 fund managers by the media outlet, close to 60% recommended buying Chinese stocks, while 31% said they are a sell. 

The survey found that what attracts most fund managers to Chinese stocks is the country's reopening after COVID, and the easing of geopolitical tensions. The fund managers also see China's stocks as attractively valued.

Some Chinese stocks that may benefit from the bullish take include e-commerce giants like Alibaba Group Holding Ltd BABA and JD.Com Inc JD and EV makers including Xpeng Inc XPEV and Nio Inc NIO. 

Also Read: 3 Chinese Stocks Moving On China's COVID-19 Restriction Rollback

However, some fund managers said they are uncertain about the country's policies and regulations, which may pose risks for Chinese equities. 

The MSCI China Index is trading 11 times forward earnings, below the average for the past five years. Moreover, the index is still well below pre-pandemic levels, Bloomberg reported.

"It does seem like there is an evolution from China in terms of their Covid approach," Ben Powell, APAC chief investment strategist at that BlackRock Investment Institute, told the news outlet. 

Talking about the 2023 outlook for China, JPMorgan strategist Marko Kolanovic said that he's still positive about the country amid favorable monetary conditions and an eventual full reopening. 

However, the chief China economist at Nomura in Hong Kong, Ting Lu, said that China's economy would shrink 0.3% in the fourth quarter compared with the third. The Wall Street Journal reported that he had cut his forecast for full-year growth from 2.9% to 2.8%.

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