Chinese stocks have improved recently but investors should remain cautious due to various risks

From The Smart Investor: 2024-06-08 05:15:00

In 2023, China faced a property crisis and struggled to recover from COVID-zero policy. Foreign direct investment hit a 23-year low due to tensions and tech crackdowns. MSCI World Index outperformed Hang Seng and Shanghai markets significantly.

China’s markets improved in April with a 5.3% GDP growth in Q1. Government policies like a RMB 300 billion re-lending facility for real estate and a 10-year “Nine-Point Guideline” boosted the markets.

Investors should remain cautious despite recent market improvements. Slow retail activities and falling housing prices are concerns. Choose companies with less government risk, minimal debt, and strong cash flow to invest in. Industries like energy, telecom, and materials have remained resilient.

Top Chinese stocks include CNOOC, with record profit and production growth. China Mobile saw revenue and profit increases, along with customer growth. Haitian International experienced revenue and profit growth due to increased sales across regions. All three companies reported positive free cash flow and dividends.

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Read more at The Smart Investor: Are Chinese Stocks Ripe for Your Picking?