Analysts at Europe’s biggest bank HSBC have turned bullish on Chinese stocks, arguing the worst of a regulatory storm has passed and that Beijing will provide policy support to arrest slowing growth.
HSBC said on Tuesday it had upgraded its recommendation on Chinese equities to “overweight” from “neutral”, joining a small but growing chorus of investors who reckon the tide is beginning to turn.
“We think the baby is being thrown out with the bathwater,” the HSBC analysts said in a report which had Herald van der Linde (NYSE:LIN), head of Asia-Pacific equity strategy, as its lead author.
“Yes, China is struggling with growth, and a stronger dollar is not good news for China’s stock markets. But that’s now well-known and is priced in,” the report said.
This year MSCI’s China index has fallen about 12% compared with a 15% rise in MSCI’s world stocks index, as crackdowns spanning technology firms’ behaviour to property borrowing have pounded share prices.
HSBC is among a few in the financial sector calling time on the selloff. Asset manager BlackRock (NYSE:BLK) said a month ago it was dipping its toes back into Chinese equities.
On technical fronts HSBC RSI stood at 78.37 and currently stock is trading above all MA. So, BUY position can be taken with following target and stoploss:
TRADE SIGNAL – : HSBC – BUY: 445.30, TARGET: 449.10, STOP LOSS : 442.35