Great News For Alibaba And Peers As HSBC Finds The Sector Promising

  • HSBC Holdings, plc HSBC found the outlook of some Chinese industries, from the internet to property, has turned brighter as it had priced in much of the bad news.
  • HSBC identified four sectors in China that look promising, Bloomberg reports.
  • The sectors included internet firms with better-than-expected earnings growth, developers to win from significant industry consolidation, renewable firms blessed with favorable policies, and consumer goods producers that benefit from demographic shifts. 
  • Also Read: Alibaba Has 63% Upside And Room For Margin Expansion, Bullish Analyst Says
  • Alibaba Group Holding Limited BABABaidu, Inc BIDU, and Tencent Holding Ltd TCEHY are known as the Chinese tech titans. Other significant companies include, Inc JDNetEase, Inc NTESMeituan MPNGY, and ByteDance Ltd.
  • China's popular real estate companies include China Evergrande Group EGRNF and Sunac China Holdings Limited SCCCF.
  • HSBC analysts highlighted a clear disconnect between the gloomy macroeconomic picture and the more positive bottom-up view of Chinese equities. Additionally, most funds are underweight, and valuations are low.
  • The report added that HSBC's more upbeat assessment of the select industries comes despite slashing end-of-year targets for benchmark indexes for shares in both Hong Kong and the mainland, citing underestimation of factors from stubborn U.S. inflation to China's rigid COVID controls. 
  • HSBC maintained an Overweight on Chinese shares but cut its end-2022 target on the Hang Seng Index and the CSI 300.
  • Price Action: BABA shares closed higher by 4.01% at $80.99 on Wednesday.
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