Jefferies Says Consumer Is Biggest China Equity Bet in Five Years | So Good News


(Bloomberg) — Jefferies Financial Group Inc. said that half of the shares issued in China over the next five years should go into consumer stocks as the government focuses on stability.

“50% should be dedicated to nutrition, and 30% to productivity and solutions to the aging population,” expert Sean Darby wrote in an Oct. 31. The results of the country’s Party Congress also show that “there is a conscious effort to make trades from encouraging short-term economic growth to stability and politics,” he added.

Jefferies’ bullishness on China’s consumer spending contrasts with indications that retail sales have weakened and that unemployment is rising. The country’s financial markets have also fallen due to a host of issues including aggressive Covid policies, the ongoing financial crisis and tensions with the West.

All of the problems have wiped $45 trillion off the market value of Chinese stocks since the peak in February 2021. The selloff gained new momentum last week as President Xi Jinping stepped up his policies by removing rivals and installing loyalists in an important leadership overhaul. .

Top gauges of commodity and election-related stocks have lost more than 30% year-to-date, in line with the CSI 300 benchmark’s 28% decline.

Darby said tech stocks also look attractive but their risk premium should rise again to reflect the “subtleties between the need for government security and the economy’s desire for profit.”

READ: Investors in China Need to Heave Heavy on Near-Term Success and Growth

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