In the wake of China’s Corona 19 lockdown and protests, the global investment bank (IB) UBS has picked stocks that will rise when China reopens (resumption of economic activity).
On the 29th (local time), Chinese health officials said that the Corona 19 vaccination rate, which is seen as an important sign of economic resumption, has gone up. They have also started preparing different steps to speed up economic resumption, such as increasing the number of elderly people who get vaccinated.
In response, UBS brought up the possibility of stocks in the MSCI Europe Index that do better than other stocks when China’s growth picks up. The analysis is based on the fact that there are a lot of sales to China, that the sales are sensitive to changes in China’s Purchasing Managers’ Index (PMI), and that the sales did well when the PMI went up.
First, Richemont Group, a Swiss luxury goods company, was chosen as the stock that depends the most on sales to China. This is because sales of expensive jewelry and watches depend on how much moneyed people in China want them. Richemont owns the jewelry brands Cartier and Van Cleef & Arpels, the watchmakers IWC and Piaget, and the pen maker Montblanc. UBS says that Richemont’s share price could go up by 13.9% from where it is now.
A large British bank called Standard Chartered (SC Bank) was also ranked as the stock with the most ties to China. UBS looked at Standard Chartered’s share price and found that it could go up by 20.8% from where it is now. The Hong Kong Stock Exchange has Standard Chartered on its list.
The next stock picked was Seaboard (SEB), which is traded on the New York Stock Exchange. It has a lot of sales in China. UBS also says that Seaboard’s share price has the most potential to go up, with a 34.9% increase. This is the highest of the stocks chosen. Seaboard is a company that works in farming and transportation.
While this was going on, China’s manufacturing PMI went down for two months in a row after the lockdown caused by the spread of Corona 19 and the instability in the global supply chain. The National Bureau of Statistics of China announced on November 30 that the official manufacturing PMI for November was 48, down from 49.2 the month before. This shows that China’s economy is shrinking. Reporter Nayoung Kim nana@wowtv.co.kr
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