China: Attractive Due to Good Price Momentum, Low Beta
Watch the video with Andrew Stotz or read a summary of the country profile on China.
Four Pillars of GDP: Driven by private consumption, investment
Overall, China is experiencing fast GDP growth with all pillars contributing to GDP growth, and private consumption contributing the most. Even though net exports contributed the least to GDP growth, exports rose by 36% year-over-year.
Attractive due to good price momentum, low beta
China has started to pick up relative to Asia ex-Japan in terms of price performance, and EPS growth is expected to pick up after a relatively poor 2015 and 2016 showing.
A. Stotz Four Elements: China’s rank relative to Asia
Overall, China is moderately attractive in Asia considering all our four elements: Fundamentals, Valuation, Momentum, and Risk.
Fundamentals: Its moderately attractive, seeing as return-on-equity has been in line with the Asia ex-Japan average.
Valuation: It remains moderate, due to a relatively high PE.
Momentum: It has good price momentum and high expected EPS growth.
Risk: China has a relative low beta to Asia ex-Japan.
Only Consumer Staples and Financials haven’t lost in value
Top 3 largest sectors: Financials: 24% of the market; Industrials: 18%; Consumer Discretionary: 12%.
Best sector & stock: Consumer Staples: +0.3% & Fujian Anjoy Foods Co Ltd: +53.1%.
Worst sector & stock: Materials: -8.2% & Xinjiang Qingsong Building Materials and Chemicals Group Co Ltd: -50.8%.
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