| "We believe a multi-year bull market has already begun in September, but the market would be volatile in the first phase of this bull run because there is still scepticism among investors, after having experienced several false dawns in the last two years." Thus said Derrick Tan and Wong Kok Hoi in a 19 Oct 2024 article on Chinese stocks (and by extension HK stocks exposed to China's economy) for The Business Times, which follows on from China's announcements of stimulus measures. Derrick Tan is group executive chairman of wealth management group Wrise Group; Wong Kok Hoi is founder and co-chief investment officer of APS Asset Management which is heavily focused on China.  China stocks are currently grossly undervalued compared to global peers, they noted. "A major rerating would ensue if earnings recover, which we are expecting to begin in 2025 and beyond." |
Sectors to focus on: Clean energy, electric vehicles, semiconductors
 “Many investors are still very sceptical about this rally. This is not a false dawn...Take a one- to two-year view. I believe this is a multi-year bull market. In coming months and quarters, you should see stronger macro data. You should also see stronger earnings.”--Wong Kok Hoi The Straits Times, 15 Oct 2024 |
With China as the world’s largest player in the renewables manufacturing market (ie solar panels, lithium batteries and wind turbines), stocks in these sectors present significant opportunities for investors.
The long-term growth for EV component makers, for example, is strong, they said.
In the semiconductor industry, China has invested heavily in recent years to narrow the gap with Western tech.
A veteran China watcher, Mr Wong, 69, emphasized in an interview (video below): "China has invested tens of billions of dollars every year to be self-reliant in the semiconductor industry, making significant progress, such as breakthroughs in 7-nanometer chip manufacturing."
The outcome will reward investors significantly as Western companies lose market share: "Once China catches up, we anticipate that a significant portion of US semiconductor companies may experience financial challenges or face potential insolvency."
