JPMorgan Chase & Co. has raised its recommendation for China’s stocks to “overweight,” stating that the prospect of large gains next year now outweighs the risk of significant losses, reports Bloomberg. “China has given back most of its outperformance this year—making for an attractive entry point,” strategists at the bank including Rajiv Batra wrote in a note published Wednesday. “Next year will bring multiple support factors such as AI adoption, consumption measures and governance reforms.”
JPMorgan’s positive switch comes following a pullback in Chinese equities from their multi-year highs reached about a month ago. The MSCI China Index has dropped 6.2% this quarter, while the broader MSCI Asia Pacific Index has gained 1.3%.
Batra and his colleagues recommended that investors buy China’s stocks in early April. Since then, the MSCI China gauge has risen about 33%, compared with an advance of 37% in the Asian benchmark.