Barclays has identified a number of European stocks poised to benefit from China’s expected economic stimulus. Investors have been closely watching for signs of government intervention as the world’s second-largest economy grapples with slowing growth and weak domestic demand. Earlier this week, the People’s Bank of China (PBOC) surprised markets by announcing plans to cut a number of interest rates, including those on existing mortgages. Mainland China’s stock market surged after the news broke. The investment bank said China’s current economic environment is similar to April 2024, when China and the country’s stock market experienced a sharp rise. “There is indeed renewed hope for stimulus (especially given the recent (rate cut), positioning is quite thin, and a 50 basis point rate cut by the Fed may allow the Chinese central bank to ease policy more aggressively. Manufacturers BMW and Mercedes and mining company Rio Tinto are among the top European stocks that may benefit from China’s stimulus measures. . All five stocks also trade in the U.S. Barclays’ price target for Prudential plc, for example, suggests a 114% gain over the next 12 months. However, the stock has fallen more than 20% this year. , partly due to its operations in China. The recent economic challenges facing China are clear, with the country experiencing its longest period of deflation since 1999, said Larry Hu, chief China economist at Macquarie. Hu stressed that additional fiscal support and efforts are needed to strengthen the housing market. Hu added: “We believe the most likely path for reflation is through housing fiscal spending, funded by the People’s Bank of China’s balance sheet. ” —CNBC’s Michael Bloom and Evelyn Cheng contributed reporting.
