Goldman Sachs Chief APAC Regional Equity Strategist Timothy Moe was largely upbeat on Chinese stocks during an interview with Bloomberg Television this morning.
The strategist is optimistic about the Chinese government’s ability to effectively stimulate the country’s economy. However he did add that for Chinese stocks to climb further, Beijing will have to provide more “clear, tangible,” evidence that it will implement previously announced stimulus measures.
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Moe does expect Beijing to come through on the latter front, partly by significantly cutting interest rates and lowering the amounts that banks are required to hold in reserve.
If the government does act effectively to boost growth, Chinese stocks, which are trading at just 9.7 times forward earnings, may enable the nation’s equities to climb this year, Moe believes.
Meanwhile, mainland Chinese citizens and entities poured over $100 billion into Hong Kong’s stock market last year, showing that “Chinese citizens are buying their own market,” he reported.
Indeed, Moe believes that domestic Chinese investors are becoming the top owners of the country’s stocks, taking over the leadership position in that area from foreigners. The latter trend is occurring partly because U.S. investors are investing less in China due to geopolitical issues, Moe reported.
Two leading Chinese stocks traded in the U.S. are Alibaba (BABA) and Baidu (BIDU).
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Disclosure: None. This article is originally published at Insider Monkey.