(Bloomberg) -- Chinese securities firms seized on the latest global market turmoil to drum up support for the country’s battered stocks, saying a turning point is near as the US economy loses steam and Beijing ramps up growth stimulus.
A string of bullish research reports have emerged since the weekend from local brokerages, arguing that growing risks and volatility in foreign markets are making Chinese equities a safer bet. Among them, Cinda Securities Co. and Industrial Securities Co. both predicted an inflection point for local stocks as soon as this month.
The upbeat assessment came after the CSI 300 Index’s 1.2% decline Monday made the benchmark look like an outperformer following a selloff on Wall Street and across Asia. That said, the gauge remains one of the world’s worst performers this year, evidence of entrenched pessimism about the world’s No. 2 economy that may well deepen if demand for Chinese exports weakens.
“Chinese assets are expected to become a better choice for global funds in this round of global market turmoil triggered by the expectation of a US recession,” Industrial Securities analysts including Zhang Qiyao said in a note, touting Chinese stocks’ low valuations and improved fundamentals.
The market is expected to continue to trade the “East is rising and West declining” theme in the near term, China Securities analysts including Zhou Junzhi wrote in a note, referring to a phrase frequently used by Chinese officials in recent years to describe their world view. “Tight dollar liquidity has loosened and expectations are growing for domestic demand to increase.”
It has become increasingly rare for Chinese investment banks and brokerages to express negative opinions on the country’s stock market in recent years, as authorities stepped up efforts to shore up investor confidence.
The CSI 300 fell 0.2% at midday Tuesday, compared with a gain of 3.9% for the MSCI Asia Pacific Index.
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