Citigroup has identified three U.S.-listed Chinese stocks that are poised to benefit from Beijing’s recently announced economic stimulus package. China launched a number of supportive policies last month to revive economic growth and boost market and consumer confidence. The Chinese government’s efforts have already had a significant impact, with Chinese Internet stocks rising sharply last week. For example, the Jinrui China Internet ETF has since surged 45%. Despite these impressive gains, Citi analysts believe the market has yet to fully price in the potential for improving macroeconomic conditions and earnings growth. “We believe the market has yet to factor in a cycle of estimate revisions that could improve the macroeconomic and earnings growth outlook,” Citi analysts led by Alicia Yap said in a note to clients on September 29. Confidence and demand for higher consumption expectations, may encourage businesses/advertisers to increase their advertising spend budgets, translating into higher advertising (revenue) growth and increased online and offline activities. The Wall Street bank named Tencent, Ctrip Group and Meituan-Dianping as top companies to capitalize on the post-stimulus rebound. Citi said the three stocks also trade in the United States. Tencent has a diversified business portfolio, including social media, games and digital payment services, which may be affected by increased consumer spending and online activities. Analysts pointed out: “We believe that economic growth may recover after accumulating stimulus policies, which may improve advertisers’ ad spending sentiment, which will be beneficial to the growth of online advertising revenue for companies such as Tencent and Weibo.” “With relatively low With the ad load and effective social influence, we believe that Tencent Video account and the entire WeChat ecosystem will receive higher advertising budget attention.” According to Wall Street Bank, Ctrip Group, a leading online travel service provider, is expected to expand from China. benefit from the recovery of the tourism industry. Citi analysts said: “Timely policy stimulus before the Golden Week holiday may encourage higher travel budget spending to upgrade services, or encourage more consumers to plan long-distance trips due to better visibility of wealth effects and job security. Citi said Chinese shopping platform Meituan is also expected to benefit from increased consumer spending, especially in areas such as food delivery and local services. The bank added that demand for entertainment, movies, karaoke and dining “will remain resilient despite some consumer appetite”. “Despite the outperformance (year-to-date), this supports our positive view on TCOM and Meituan,” the analysts added. — CNBC’s Michael Bloom contributed reporting.
