Shen Yao Ng, investment director for Asian equities at Aberdeen, said Indian stocks had risen to the point that China looked relatively attractive. “Just take a fundamental point of view, there is a lot of value in China,” he said in an interview on Friday. “But we don’t know how long we have to wait.” Until the Chinese economy rebounds, his strategy is to pick stocks. Official figures show that China’s growth has slowed from the pace of previous decades. Chinese stocks have fallen over the past few months, with the Shanghai Composite Index trading near lows not seen since the early months of the pandemic in 2020. All of this comes after a year in which growing concerns about the Chinese economy and lack of stimulus kept investors on their toes. margin. Aberdeen’s Ng remains cautious on China, saying the most important indicator is the real estate sector, especially transaction volume and prices. “Once that stabilizes, consumers can be more confident, and households can be more secure about their financial situation,” he said. But it is still unclear when this will happen. Ng does not expect major stimulus from the government in the coming months. Last week, Chinese Premier Li Qiang showed restraint when he told the global audience in Davos that China “did not resort to massive stimulus” and “did not pursue growth in the short term while accumulating risks in the long term.” What to buy In the meantime, Ng said he is focusing on Chinese stocks with high free cash flow yields — a measure of potential return — especially for some internet names that have announced share buybacks. “In China, there are a lot of stocks that give you a free cash flow yield of more than 10%,” he said, noting that the yield is only 1% to 2% for stocks in India. Although Aberdeen is generally overweight in India and underweight in China, Ng said. He said the company is selectively taking some funds out of India after the rally to put in China and some thematic plays. Aberdeen’s funds include the China Sustainable Equity Fund, which had $2.4 billion at the end of November. Its 10 largest holdings include Koichou Moutai, Ayer Eye Hospital and Mindray. “We are selectively adding things like sportswear,” Ng said, noting that outdoor activities have become more popular in China, which has helped Nike and brands owned by China’s Anta. Another area for selective buying is health care stocks, he said. He said the company expects companies like Mindray to emerge “much stronger” from China’s anti-corruption drive in the sector – with a hedge provided by its growing export business. One category Aberdeen has started to look at more is some export-oriented names, Ng said, in light of expectations that the US economy will see a soft landing and create greater-than-expected demand for Chinese goods. He said, “We are starting to hear that some (industrial) names are starting to talk about a recovery in orders. There may be some green shoots.” China’s exports grew faster than expected in December, but not enough to offset this year’s decline, the first annual decline since 2016. Nomura’s leading index of Asian exports, released on Friday, indicated that Asian exports could grow as soon as February. The index has risen for four consecutive months to its highest levels since May 2022. But for the Chinese economy in general, there are still a series of concerns related to geopolitics and the aging population. “Investors and businesses want big stimulus, big economic support, but the government doesn’t seem to think the economy needs that,” Ng said, noting that “in an economic downturn, you actually have to over-ease to break that.” A downward spiral in confidence.”