Citi has identified three US-traded Chinese stocks that are poised to benefit from Beijing’s recently announced economic stimulus package. China introduced several supportive policies last month to revive its economic growth and bolster market and consumer confidence. The Chinese government’s efforts are already showing a big impact, as China’s internet stocks made huge gains last week. For example, the KraneShares China Internet ETF has grown 45% since then. Despite these impressive gains, Citi analysts believe the market has not fully priced in the potential for improved macroeconomic conditions and income growth. “We believe [the] the market has not priced in the rating review cycle regarding the possible improvement of the main development and the earnings outlook,” said Citi analysts led by Alicia Yap in a paper to clients on September 29 “The wealth effect from the market rally should increase consumer confidence and expect to rise the highest. consumption demand, can encourage businesses/advertisers to increase their ad budget, which translates into higher ads [revenues] growth and expansion of online and offline activities.” The Wall Street bank named Tencent , Trip.com Group and Meituan as their top picks for the post-stimulus rally. The three stocks are also traded on US Tencent The technology conglomerate and owner of WeChat stands to benefit from many aspects of the incentive program, according to Citi it has a diverse portfolio of businesses, including social media, games, and digital payment services, which can be influenced by the increase in consumer spending and Internet activity. The possible economic growth following the positive promotion policy may lead to an improvement in the sentiment of ad spending that will benefit the growth of online advertising revenue for Tencent, Weibo and others,” analysts noted. believe Tencent’s Video Account and the WeChat ecosystem as a whole higher ad budget.” Trip.com Trip.com Group, a leading online travel service provider, is set to benefit from the resurgence of China’s travel industry, according to a Wall Street bank. “The timely policy stimulus ahead of the Golden Week holidays is likely to encourage higher budget spending on enhanced services or encourage more consumers to plan longer trips due to the influence of wealth and better visibility on job security,” Citi analysts said. Meituan Meituan, a Chinese shopping platform, is also poised to benefit from increased consumer spending, particularly in areas such as food delivery and local services, Citi said. The bank also added that demand for entertainment, movies, karaoke, and food “will remain strong despite the desire to spend.” “This supports our positive view on TCOM and Meituan though [year to date] excellent performance,” analysts added. — CNBC’s Michael Bloom contributed reporting.
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