Chinese stocks ended a significant week that featured a $1.4 trillion debt exchange program that fell short of many investors’ demands for more direct government support. For many, the investor reaction only reinforced the need to focus on the long-term opportunity in static individual stocks. In a closely watched press conference on Friday, the Treasury Department signaled that more fiscal support could come next year, while focusing on addressing local government debt problems in the short term. The relatively modest move comes as China prepares to strengthen trade ties with the United States under President-elect Donald Trump, who has threatened to impose high tariffs on imported goods. Against this backdrop, last week, the Shanghai market’s CSI 300 stock index was able to rise by nearly 6.6%, and Hong Kong’s Hang Seng Index rose by 3.2%. Preventing further economic downturn Ren Lijian, head of quantitative investing at WisdomTree, said that at a macroeconomic level, China is trying to prevent further deterioration in inflation and employment. Ren doesn’t expect rapid growth to return, but he is concerned about how Chinese companies can build brands and mature models that previously competed solely on price to command a premium. I’m paying attention. “So I don’t think a consumer company like Anta is well understood outside of China, but Anta is really becoming a world-leading sportswear company,” Ren said. “I think they’re going to be globally active soon, too. But not many Americans know about this brand.” But if Anto continues on its current path, it’s likely that in 10 years it will be Mr. Ren said that people would equate Anta with “Adidas and other so-called foreign sports brands.” That’s one of the things I personally pay attention to. Anta, which is listed in Hong Kong, owns Fila and luxury brand Descente, among others, and sells sportswear under its own brand. The company announced in October that Antabrand retail sales rose mid-single digits year over year in the third quarter, while Fila sales slumped and other brands grew up to 50%. Anto stock is up 18% so far in 2024. Despite the economic slowdown, China’s efforts to compete with foreign brands remain unabated. Baidu reportedly plans to release its own artificial intelligence-connected glasses on Tuesday that will compete with Meta’s RayBans products. Xpeng Expansion Electric vehicle startup Xpeng last week unveiled its own humanoid robot and a new $26,000 car called the P7+, which has already attracted more than 30,000 pre-orders for deliveries scheduled to begin this month. The products will be sold primarily only in China, at least initially. “The door is closed for EVs in China and reshoring is not realistic,” Macquarie analysts said in a report on November 7. “Our top choice is XPeng, a pure Chinese player.” “XPeng has no exposure to the U.S. market and no plans to enter the market at this time,” the analysts said. . “Domestic sales volumes have scope to grow rapidly, driven by new competitive models like M03 and P7+. “PureVision ADAS is helping to alleviate concerns,” Macquarie analysts said. “Future catalysts, such as the launch of the M03 and hybrid system vehicles, may benefit from domestic confidence and consumption recovery and are not affected by geopolitical events.” Of Xpeng’s more than 20,000 deliveries in the past two months, about half were for the company’s budget car Mona M03. Macquarie’s number one choice in the consumer sector is Yum China, which operates Pizza Hut and KFC in China. “YUMC is our top idea in the consumer sector, given that it is a purely domestic market business,” analysts said. “The company’s strategic shift from Pizza Hut WoW to franchised stores and new store formats at K COFFEE can drive long-term growth and insulate it from geopolitical risks.”Yum China targets shareholder return The company added that the company has increased its sales from $3 billion in 2024 to $4.5 billion in 2026. Yum China reported its third quarter results on November 4th, revealing that operating profit rose 15% year-on-year to $371 million. Xpeng is scheduled to report its quarterly results on November 19th. Next week, internet giants Tencent and Alibaba will both report earnings. The central government is scheduled to release retail sales and industry statistics for October on Friday, November 15th. “If you want to invest in China, you need to be prepared to endure negative emotions,” Ren said. “Long stretches” are common.[es] “It’s a negative sentiment feeling that really tests a person’s risk-taking.” But she also emphasized that Chinese stocks could act as a hedge to other stock markets. — CNBC’s Michael Bloom contributed to this report.
3 Chinese stocks analysts are eyeing for long-term opportunities
