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<Research>JPM: N America Roadshow Shows Most Investors Agree CN Tech & NEV Stocks Offer Value, Focus on Tencent’s Wed Results Release
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JP Morgan released a China market strategy report. Over the past week, the broker met with equity investors from North America, including those focused on global and emerging markets (EMs). Beyond EM investors, a growing number of global/ international investors are eager to identify investments with attractive risk-reward profiles during the current rebound phase. The broker noted that most investors agree on the investment value of Chinese internet and IT stocks, leading new energy vehicle (NEV) companies, and edge AI stocks. The success of DeepSeek convinced global investors of China’s AI capabilities, bolstering support for investments in internet, IT, and NEV sectors, which are less impacted by macro fluctuations. On the forward 12-month P/E gap between Chinese and U.S. stocks, the disparities between TENCENT (00700.HK) and Meta (META.US), XIAOMI-W (01810.HK) and Apple (AAPL.US), and Chinese telecoms and Verizon (VZ.US) are narrowing or reversing, though a significant gap persists between BABA-W (09988.HK) and Amazon (AMZN.US). Among specialized tech investors, discussions frequently center on global AI capex and returns, with Tencent’s 4Q24 results, due to be announced on Wednesday (19th), seen as critical for assessing incremental AI capex and future monetization prospects. JP Morgan highlighted that consensus among investors on real estate stabilization and consumption recovery remains limited. Whether a broader economic recovery can juice gains in real estate, financial, and consumption metrics is still under debate. If proven true, this would strengthen the structural case for long-term trades. Currently, the market widely believes that China’s real estate sector will continue to exacerbate deflationary pressures for some time, generating a negative wealth effect that suppresses consumer confidence and spending. EM funds maintain an Equalweight or Overweight stance on China, while global/ international funds mostly hold an Underweight position on Chinese stocks. However, an increasing number of global/ international funds are beginning to research stocks beyond the usual handful of well-known names. Investors recognize that local brands better reflect China’s value-for-money consumption trends. The broker compared forward 12-month P/E ratios and EPS growth for ANTA SPORTS (02020.HK) vs Nike (NKE.US), and Proya (603605.SH)/ Botanee (300957.SZ) vs Estee Lauder (EL.US), finding Anta and Proya more competitive. For real estate, consumption, and financial sectors, the broker favored Anta, CHINA RES MIXC (01209.HK), and HTSC (06886.HK). A common concern among global investors regarding the Chinese market is the uncertainty surrounding tariff hikes, escalating U.S.-China tensions, and potentially weaker mainland macro data in March and April, JP Morgan pointed out. AAStocks Financial News |
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