Financial institutions give higher ratings for listed Chinese companies

Overseas financial institutions including JPMorgan and Citi recently raised the target share prices for major Chinese companies such as Meituan and BYD. Their moves indicate the growing confidence of international investors in the country’s capital market development.

JPMorgan increased the target price for service-focused e-commerce giant Meituan.com from HK$140 ($17.99) to HK$200 on Monday, supported by the company’s increasing monetization and improving revenue resilience of in-store and hotel segments, the Securities Times reported on Tuesday, citing a JPMorgan report.

JPMorgan noted that it sees more room for an upside in Meituan’s share price in the next six to 12 months. Meanwhile, Citi raised the target price for Meituan.com from HK$192 to HK$203.

Daiwa Securities recently raised the target price for China’s largest electric vehicle maker BYD from HK$376 to HK$431, with the buy rating remaining unchanged.

And, BofA Securities upgraded the rating for Nongfu Spring, China’s major bottled water supplier, from neutral to buy, and elevated the company’s target share price from HK$29.5 to HK$40, according to Securities Times.

As for the tech sector, JPMorgan raised the target price for NetEase from HK$170 to HK$185. Earlier, DBS Bank increased the target price for Tencent from HK$537 to HK$577, according to the bank’s website.

“The increased target prices from overseas institutions showcased the investors’ continuously growing confidence in China’s capital market, bolstered by the government’s new stimulus policy package,” Yang Delong, chief economist at Shenzhen-based First Seafront Fund, told the Global Times on Tuesday.

Meanwhile, foreign financial institutions continued to give optimistic reports on Chinese assets for next year. The MSCI China Index is expected to yield a return of 5-6 percent in 2025, James Wang, head of China Equity Strategy Research at UBS Investment Bank, said in a note recently.

The MSCI China Index measures large and mid-cap representations across China securities that are listed at Shanghai and Shenzhen bourses, according to the website of MSCI, an investment research firm that provides stock indexes, portfolio risk and performance analytics.

In addition, an increasing number of foreign financial institutions have established new branches or expanded the scope of their existing businesses in China.

Singapore-based DBS has obtained regulatory approval to increase its stake in DBS Securities China to 91 percent from 51 percent, with the transaction valued at about 823 million yuan ($113.05 million), the Xinhua News Agency reported.

Standard Chartered Securities China Limited officially commenced its business operations earlier this year, while BNP Paribas set up its securities branch in China in July and became the fourth approved wholly foreign-owned securities firm in the country.

In a latest sign of the improving economic activity, the Caixin China General Manufacturing Purchasing Managers’ Index reached 51.5 in November, up 1.2 points from the previous month, marking a second straight month of manufacturing expansion and the highest level since July, according to data released on Monday.

Global Times