Time to buy China shares and hedge India’s exposure, says BlackRock

Belinda Boa, Head of Active Investments for Asia Pacific, the world’s largest asset manager, said at a briefing, “Valuations are important right now. Because of the strong performance we’ve seen in India this year, we’re starting to take profits.” And the Chinese are turning more positive on growth stocks, she said.

After a world-beating rally, concerns about poor liquidity from broker downgrades and poor performance for the country’s biggest initial public offering have dented sentiment on Indian stocks. Conversely, there is growing confidence among investors that Chinese stocks could surge as the worst-case scenario for regulatory scrutiny of Beijing’s private enterprises is probably over.

BlackRock has changed its Asia-focused portfolio to have a more neutral position on China, above less weight, and to reduce its underweight calls on Internet service companies.

“The timing of the situation in the China market is now,” Lucy Liu, a portfolio manager for global emerging markets, said at the same briefing. Economic growth could surprise upwards with signs of “bottom out” for the Internet and property sectors, she said.

Discretionary spending probably won’t return to pre-Covid levels anytime soon and upstream prices will moderate, keeping a lid on inflation, Liu said. Helped by a liberal monetary policy, the environment is “more favorable” for growth stocks in China, according to BlackRock, which is investing in China around four themes – sustainability, self-reliance, social equity and data security.

Nevertheless, the New York-based asset manager is positive on India over the long term due to structural reforms, economic growth and a strong pipeline of share offerings. The BoA said there should be a “continuous growth of IPO listings” with opportunities in India’s technology and especially in new economy sectors.

This story has been published without modification in text from a wire agency feed.