China: Policy floor supports risk-reward – Societe Generale
Societe Generale strategists see improving risk-reward in China equities after a recent correction, especially in onshore technology. They highlight National Team purchases and revived buyback incentives as evidence of a policy floor.
Societe Generale strategists see growing risk-reward potential in Chinese equities after a recent market correction, particularly in onshore technology. They identify National Team purchases and renewed incentives for stock buybacks as evidence of a policy floor being established. The analysts maintain a preference for Technology, Onshore China, and Large Caps, with AI internet platforms expected to benefit in the near term.
The market correction has lowered valuation excesses, especially in onshore technology. National Team purchases provide market support, while the resumption of buyback incentives indicates policymakers' readiness to intervene during periods of significant market pressure. Collectively, these actions strengthen investors' confidence in the presence of a policy floor.
In the short term, AI internet platforms are expected to gain from the recovery in US hyperscalers. In the longer term, the company retains its preference for Onshore Technology, which offers diversification amid mounting doubts about the long-term viability of the global AI expansion.
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