China stimulus offers array of opportunities

Reuters

China stimulus offers array of opportunities - Janus Henderson

2024 10월 3 일, 오전 10:09 GMT

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STOXX 600 down 0.6%

Autos top fallers

Eurozone PMI points to contraction

Wall Street futures down

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CHINA STIMULUS OFFERS ARRAY OF OPPORTUNITIES - JANUS HENDERSON

The STOXX 600 .STOXX has given up the gains it made on the back of China's newly announced stimulus last week, having shed 1.5% since last Thursday.

But China's large caps stocks remain on track for their biggest two-week rise on record, and investors are still asking: is this round of stimulus a gamechanger for domestic stocks?

It could be, according to head of Greater China and portfolio manager Victoria Mio at Janus Henderson, who says the moves mark a decisive shift from debt control to growth support.

There are three main implications she sees for investors, the first being an opportunity in valuations.

"The MSCI China Index has a 12-month forward P/E ratio of around 10.3x (as of 30 September 2024), making it one of the cheaper markets compared to global peers," she writes.

Portfolio diversification is another appealing factor.

"With additional fiscal stimulus measures expected, China could potentially outperform other developed and emerging markets in the coming quarters."

Finally, sector winners stand out.

"The recent policy announcements have created positive momentum across sectors such as technology, consumers, property, commodity, healthcare, and financials..." Mio says.

There are compelling reasons why Mio thinks the most recent stimulus might be more successful in kickstarting China's economy than the measures unveiled in April.

They include a more supportive external environment after the U.S Federal Reserve's big rate cut in September, an increased sense of urgency from Chinese policymakers, and a more comprehensive and targeted set of measures.

(Lucy Raitano)

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EARLIER ON LIVE MARKETS:

STOXX ERASES CHINA RALLY, AUTOS DRAG CLICK HERE

EUROPEAN FUTURES EASE, TESCO UPS PROFIT FORECAST CLICK HERE

PMIS TO PAVE THE WAY FOR RATE CUTS CLICK HERE

EU open https://tmsnrt.rs/3ZNCMCG

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