Chinese and Indian Stocks Offer Lucrative Opportunities in Tech, Pharma, and IT
Leading investment bank Bernstein has identified a range of Chinese and Indian stocks that present high-value opportunities in sectors such as technology, pharmaceuticals, and information technology (IT). These stocks have been included in a list of opportunities for value, growth, and quality by the bank’s analysts.
In a research note dated July 31, the analysts, led by Rupal Agarwal, stated that their preferred portfolio of high-yield stocks and momentum names are well-positioned to weather a global recession, an Asian midcycle recovery, and a potential rate hike or pause in the United States. All of the selected stocks have been rated as outperform by Bernstein.
The analysts expressed their belief that it is the right time to increase risk exposure in China by adding more high-volatility stocks. Among the bank’s chosen Chinese stocks is internet giant Tencent, with Bernstein stating that the company is back on track, projecting high-single digit or better gaming growth in the future. The analysts also pointed out that advertising revenues for Tencent should accelerate on a two-year stack. Additionally, Bernstein picked e-commerce platform Meituan, characterizing its position compared to competitors as very robust. The bank further stated that Meituan’s valuation premium has significantly decreased, making it an attractive choice for contrarian investors. Pharma company Wuxi Biologics was also listed as a top pick by Bernstein, highlighting its continual market share growth in new biologics entering the global pipeline. The analysts emphasized that Wuxi’s ability to attract new clients has not been significantly impacted by geopolitical tensions.
Furthermore, Bernstein selected Chinese internet giant Baidu, noting that the company’s strategy will receive a new lease on life with the emergence of generative artificial intelligence (AI). The analysts stated that this technology will accelerate Baidu’s business development and provide tailwinds for reshaping its strategy.
Turning to Indian stocks, Bernstein identified Sun Pharma, a pharmaceutical company, as an outperformer due to its strong performance in 2022 and continued success across multiple fronts. The analysts commended Sun’s specialty drug portfolio in the United States. Additionally, Bernstein chose Bangalore-based IT consultancy Infosys as its preferred stock in the sector, anticipating benefits from the recovery in demand. Indian conglomerate Reliance Industries also made the list for its investments in retail and telecom infrastructure. The bank highlighted the popularity of Reliance’s online platforms, including Ajio and JioMart, as well as its extensive partner network through the New Commerce B2B initiative.
Bernstein’s analysts concluded that their preferred investment strategy for the third quarter of 2023 in Asia is to strike a balance between investing in both value and momentum stocks, while taking positions against underperforming stocks.
Overall, these recommendations reflect Bernstein’s positive outlook on Chinese and Indian stocks in key sectors such as technology, pharmaceuticals, and information technology. Investors looking for opportunities in these markets may find these selections valuable to their portfolios.
