Connect with us


China Traders Hunt for Long-Term Reopening Winners After Frenzy

News Agencies



(Bloomberg) — As China’s reopening starts to take shape, investor focus is increasingly seen shifting from frenzied stock bets to longer-term plays such as consumer and health-care shares.

Most Read from Bloomberg

Money managers are zeroing in on companies that’ll benefit from a reopening-led economic recovery instead of travel and catering firms whose shares have jumped sharply in the early days of the rally. Some are positioning for a full easing of Covid restrictions to take place by March, even if the journey toward that end may be bumpy.

“With the trajectory of the economy set to be back on track, it is time to shift focus from stocks primed to jump on short-term changes,” said Hua Tong, fund manager at Shenzhen Zhengyuan Investment Co. “We can now afford to take the longer-term view to seek out opportunities — and the biggest unrealized opportunity is in the consumer sector.”


November’s historic rally is being seen as a gamechanger for Chinese equities after months of gut-wrenching swings fueled by rolling lockdowns that many said were the single-biggest drag on the market. Investors are seeking potential buys as Beijing gradually relaxes curbs that combined with a property crisis made key Chinese gauges the world’s worst performers for much of this year.

Recent measures from authorities include allowing some low-risk patients to isolate at home and loosening restrictions in select cities, with the official rhetoric on Covid also coalescing around a softer tone.

‘First Shot’


“The reopening trade will be led by consumption and health care in the coming months,” said Li Changmin, fund manager at Snowball Wealth. “Guangzhou’s surprise reopening, even with its high case count, has fired the first shot, and this could expedite the time line for ending Covid Zero.”

Li expects a full reopening to occur before China’s annual parliamentary meetings take place in March. “Life returning to normal would mostly benefit the blue-chip names which have suffered huge valuation discounts, whereas the upside for travel and airlines stocks has been mostly priced in,” he said.


The CSI 300 Consumer Staples Index is trading close to 22 times its one-year forward earnings, compared to an average of almost 27 times over the past three years. Heavyweights such as liquor manufacturer Kweichow Moutai Co. and dairy product maker Inner Mongolia Yili Industrial Group Co. are down about 40% from last year’s peaks.

The initial leg of the reopening trade has seen more volatile stocks lead the charge. Shares linked to the travel, catering and pharmaceutical industries have been among the prime beneficiaries.

For example, Xi’an Tourism Co. jumped 37% in November while hotpot chain Haidilao International Holding Ltd. rallied 64% in Hong Kong. Shanghai Shenqi Pharmaceutical Investment Management Co. surged as much as 100% in November on speculation that a drug manufactured by the firm would be used to treat Covid patients.


Meanwhile, Moutai and Yili ended the month with gains of about 18% and 14%, respectively.

Sportswear, Cars

More broadly, the Hang Sang China Enterprises Index soared 29% in Hong Kong in November, the most since 2003. China’s benchmark CSI 300 Index jumped almost 10% in its best performance since July 2020. The rally has eased since, with the gauges little changed over two sessions in December.


Paul Pong, managing director at Pegasus Fund Managers Ltd. favors consumer stocks such as sportswear and car makers which are expected to beat their peers when spending picks up. “Big tech firms that have been laggards, like Alibaba and Tencent, will also outperform as they have high beta and benefit directly from a consumption recovery.”

To be sure, some still see room for a further rally in the traditional cohort of reopening plays. Manishi Raychaudhuri, Asian equity strategist at BNP Paribas, says that stocks related to tourism, restaurant chains, e-commerce, Macau gaming and retail-focused REITs may notch up more gains.

“Other Asian markets, like Thailand, also offer interesting exposures to this theme – through airports and hotel chain stocks,” he said.


READ: Korean Cosmetics Stocks Extend Rally on China Reopening Hopes

Long Game

All said, an increasing number of investors are setting their sights on the longer-term play even though China’s exit from Covid Zero may be fraught with challenges.


“Reversing course is going to be like walking on a tightrope, full of adjustments in both directions in the search for the most desirable solution,” said Liu Xiaodong, partner at Shanghai Power Asset Management Co.

“This means that many of the reopening plays may be prone to flip flop and end up moving horizontally,” Liu said. “If anything, I think health-care does have potential, whichever way the tide turns in the short term, people are going to need treatment.”

Most Read from Bloomberg Businessweek


©2022 Bloomberg L.P.

Continue Reading


Breaking News

Editor Pick’s

Latest Entertainment

Entertainment4 hours ago

Stephen Dorff slams ‘garbage’ superhero movies, Marvel’s ‘Blade’ reboot: ‘We already did it and made it the best’

Stephen Dorff attends the premiere of his movie “Divinity” on Jan. 21 at the 2023 Sundance Film Festival in Park...

Entertainment5 hours ago

Yoshiki, glam-rocker responsible for ‘changing Japan’s culture,’ eyes U.S. stardom with supergroup the Last Rockstars: ‘It’s kind of cool to break some kind of boundary again’

When Japanese musician/composer/producer Yoshiki founded seminal glam-metal band X Japan back in 1982, pounding the drums in kabuki-esque facepaint, peroxide-blond...

Entertainment7 hours ago

Britney Spears asks fans to respect her privacy after police welfare check: ‘Things went a little too far’

Britney Spears says things went “too far” after fans called police to her home. (Photo: FilmMagic) Britney Spears broke her...

Entertainment8 hours ago

Camila Mendes details struggles with eating disorder: ‘I was really afraid of eating carbs’

Camila Mendes opens up about recovering from an eating disorder. (Photo: Frazer Harrison/Getty Images) Camila Mendes is opening up about...

Entertainment8 hours ago

Amy Robach and T.J. Holmes mediating with ABC amid suspension: ‘It’s all a huge mess,’ says source

T.J. Holmes and Amy Robach’s fate at GMA3 unclear as the two begin a mediation with ABC. (Photo: Getty Images)...

Entertainment12 hours ago

‘Shazam 2’ Trailer Highlights the Villainous Daughters of Atlas

A new Shazam! Fury of the Gods trailer has been released, giving fans a closer look at the upcoming DC...

Entertainment12 hours ago

Salma Hayek’s see-through dress leaves Channing Tatum speechless: ‘I have no comment’

Salma Hayek stuns in a see-through dress at the premiere for Magic Mike’s Last Dance. (Photo: Getty Images) Salma Hayek...

Entertainment12 hours ago

Succession season 4 teaser promises more warring, more Wambsgans, and a wedding

Succession will return for its fourth season March 24, HBO announced today. And we also got us our first, predictably...


Latest Sports

Sports44 mins ago

Quick Wrap – #1 Purdue 75, Michigan 70 – First to 20 Wins

Purdue becomes the first team with 20 wins, going into Ann Arbor and winning a close one. Purdue looked like...

Sports1 hour ago

Mavericks star Luka Doncic leaves game vs. Suns early with left ankle sprain

Luka Doncic rolled his left ankle just minutes into the game on Thursday night.

Sports2 hours ago

Greg Olsen braces to be bounced from top Fox booth by Tom Brady

Former NFL tight end Greg Olsen knew when he ascended to the No. 1 booth at Fox this year that...

Sports2 hours ago

Arizona Cardinals head coach search: Five candidates remain after two make decisions

The Arizona Cardinals are busy lining up interviews with head coach candidates.

Sports2 hours ago

3 fights break out 16 seconds apart in Flyers vs. Wild game

It was Fight Night in St. Paul on Thursday as the Wild took on the Flyers in a heated matchup.

Sports3 hours ago

NBA All-Star starters 2023: Joel Embiid not selected in Eastern Conference frontcourt

Joel Embiid, the Eastern Conference's leading scorer with 33.4 points per game, was not selected as an All-Star starter. By...

Sports3 hours ago

Gio Reyna scores second straight winner in second game since USMNT World Cup saga

Reyna did it again Wednesday, just three days after marking his return from the World Cup with a winner.

Sports4 hours ago

Rui Hachimura’s well-rounded skills on display in Lakers debut

Forward Rui Hachimura made a number of shots from the post, mid-range and long distance in the Lakers' victory over...

Technology Hot News

Technology1 week ago

Led by "Amazon" and "Microsoft" .. the technology giants are planning to lay off 64,000 employees

After 10 years of driving the stock market bull run, big tech companies are racing to downsize staff to adapt...

Technology1 week ago

Apple introduces MacBooks with new M2 processors

Yesterday, Tuesday, Apple unveiled MacBooks powered by the new, faster “M2 Pro” and “M2 Max” processor chips, in a surprise...

Technology1 week ago

All you need to know about the upcoming Galaxy S23 phones from Samsung

Samsung has officially announced that the (Galaxy Unpacked 2023) event will be held this year on Wednesday, February 1, which...

Technology1 week ago

FTX Exchange Announces Hacking and Stolen $415 Million in Cryptocurrency

Bankrupt American cryptocurrency firm FTX announced today, Wednesday, that $415 million in cryptocurrency has been hacked and stolen from the...

Technology1 week ago

Because of a "fraudulent tweet"… Elon Musk's trial begins

Elon Musk's trial began Tuesday in San Francisco with the selection of jury members who will have to decide whether...

Technology1 week ago

An electric spoon replaces salt and spices, but with conditions

Experts have developed an electric spoon that is able to replace spices and flavors and affect the taste buds in...

Technology2 weeks ago

The biggest dangers of using tracking devices.. so you can escape?

If you spot an unknown Bluetooth tagging device, there are ways to disable the device so it can't track your...

Technology2 weeks ago

New Twitter.. For You tab to web version

The Twitter platform announced that it will bring the new tab (For You), which launched last Tuesday for iPhones and...