Gavekal co-founder says China stocks are the world’s top value bet amid profit boom

Charles Gave, co-founder of the Gavekal group, asserts that China's stock market currently presents the world's most attractive investment opportunity. Gave anticipates a surge in corporate profits, particularly in sectors such as healthcare, tourism, and luxury goods. He notes that the Chinese market is undervalued compared to cash, Chinese bonds, gold, and global stock markets, describing it as being in a state of "total panic." Gave is optimistic about China's economic outlook, citing a stage where profit growth surpasses the cost of capital, signalling potential for increased investment and hiring. The recent positive sentiment is fuelled by a reduction in banks' reserve requirements and news of a potential $278 billion stock rescue package from Beijing. However, some remain skeptical, emphasising the need for sustained structural improvements. Despite Gave's past bullish recommendations on China stocks, he points to successful calls in other markets, such as Japan in 2020. Gave expresses a strong inclination to leverage up for acquiring quality Chinese equities amid the market's significant value decline from its 2021 peak.

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By Abhishek Vishnoi

China's battered equity market now offers the best value in the world, according to a co-founder of the Gavekal group.

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