Citi has identified three U.S.-traded Chinese stocks that could benefit from the Chinese government’s recently announced economic stimulus package. China introduced several supportive policies last month to revive economic growth and boost market and consumer confidence. The Chinese government’s efforts are already showing significant results, with Chinese internet stocks posting strong gains last week. For example, the KraneShares China Internet ETF has soared 45% since then. Despite these impressive gains, Citi analysts believe the market has not fully priced in improved macroeconomic conditions and the potential for earnings growth. “we believe [the] “The market is not pricing in a cycle of estimate revisions for the potential for improvement in the macroeconomic and earnings growth outlook,” Citi analysts led by Alicia Yap said in a Sept. 29 client note. We hope that the wealth effect caused by the rise in the economy will boost consumer confidence and lead to an upturn in the economy.” Rising consumer demand may prompt companies and advertisers to increase their advertising budgets, leading to an increase in advertising spending. [revenues] Wall Street banks have named Tencent, Trip.com Group and Meituan as top candidates to take advantage of the post-stimulus rebound. These three stocks are also traded in the United States. Tencent is a technology conglomerate and owner. According to Citi, WeChat stands to benefit from various aspects of the economic stimulus package, and Tencent has a diverse portfolio of businesses such as social media, gaming, and digital payment services, which are linked to consumer spending and online May be affected by increased activity. “A potential recovery in economic growth following aggressive economic stimulus policies is likely to lead to improved ad spending sentiment among advertisers, which will be positive for online ad revenue growth for companies such as Tencent and Weibo. “We are thinking about it,” analysts said. Trip.com Trip.com Group, a leading online travel service provider, is expected to benefit from the resurgence of China’s travel industry, the Wall Street bank said. “A timely policy stimulus ahead of the Golden Week holiday could lead to increased travel budget spending on upgraded services and more consumer spending, due to wealth effects and improved prospects for job security,” Citi analysts said. “This is likely to encourage people to plan long-distance travel.” Chinese shopping platform Meituan Meituan is also poised to benefit from increased consumer spending, particularly in areas such as food delivery and local services, Citi said. The bank added that demand for entertainment, movies, karaoke and food and beverages “remains resilient despite spending appetite.” “This confirms our positive view of TCOM and Meituan. [year to date] outperforming,” the analysts added. —CNBC’s Michael Bloom contributed reporting.
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