Investing pro says some sectors in China have ‘astonishing strength’ — and names stocks to play in 2024
China’s sluggish economy and property troubles turned many investors bearish in 2023 — but one sees a lot of promise in certain parts of the country’s market. “I think the main reason why strategists worldwide are pretty negative on China for say the new decade is [its] population parameters – we know this is a little adverse in China,” said Kingsley Jones, founder and chief investment officer at the Australia-headquartered investment firm Jevons Global. China is facing a population crisis and birth rates have not picked up even though the government abolished its one-child policy in 2016 and scrapped childbirth restrictions in 2021. “The view has been, ‘why would you invest in the [Chinese economy]?’… I think there’s a lot of folks who are a little bearish, perhaps they think that China is on the verge of a collapse. I don’t share that view,” added Jones, who was speaking to CNBC’s ” Street Signs Asia ” on Tuesday. “I think that there is a strong part of the Chinese economy; so, don’t buy the Chinese economy as a whole, buy the strength.” Acknowledging that China is “changing gears,” Jones noted that it has “astonishing strength” in the electric vehicle and new energy sectors. Stock picks Among the stocks he is bullish on is Chinese electric vehicle giant BYD . “We think it’s a great buying opportunity right now,” Jones said. He added that visibility on the company has been picking up it the lead-up to the launch of its “high performance” vehicle that integrates smartphone technology into its operating system. The company announced on Jan. 1 that it produced over 3 million energy vehicles in 2023 and it looks set to surpass the production levels of Tesla for the second consecutive year. Tesla, which has yet to release its full-year figures, previously said it produced 1.35 million cars in the first three quarters of last year. Year-to-date, shares in BYD were down nearly 4% on Jan. 2 to 209 Hong Kong dollars ($26.75). As for the mining sector, Jones likes Zijin Mining Group . “They’re very active in copper [and] gold worldwide. And they’re showing very good growth on copper. And we think in fact, that Zijin will probably be the leading company worldwide for growing copper production, and it’s fairly priced at this point in time,” he said. Demand for copper has been growing in China, boosted, among other things, by the shift toward electric vehicles as part of the energy transition. Year-to-date, shares in Zijin Mining were trading up around 1.3% at HK$12.86. Other Chinese stocks that Jones finds promising include smartphone company Xiaomi , electric vehicle batteries producer CATL and chemicals company Sunresin New Materials . — CNBC’s Penny Chen and Charmaine Jacob contributed to this report.
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