Lorraine Tan, Director of Equity Research in Asia for Morningstar, pinpointed the overdone market reaction to this round of epidemic in Mainland China, with quite a lot of Shanghai factories resuming production at the moment. Supply and logistics issues have relatively been alleviated as compared with the case in 2020, but U.S. rate hike and other adverse factors are still affecting investors.
As for the consumption sector, Morningstar predicted the peak of China's epidemic in six to eight weeks. This, coupled with persistent anti-Covid measures, may weaken the country's retail sales growth in the second quarter.
BABA-SW (09988.HK) and YUM CHINA-S (09987.HK) are among the sector top-picks. On one hand, macro improvement and a larger share buyback scale should be conducive to BABA-SW's 2H performance. On the other hand, YUM CHINA-S will be a long-term beneficiary of China's population structure changes, with huge upside room for fast-food penetration.
As for the consumption sector, Morningstar predicted the peak of China's epidemic in six to eight weeks. This, coupled with persistent anti-Covid measures, may weaken the country's retail sales growth in the second quarter.
BABA-SW (09988.HK) and YUM CHINA-S (09987.HK) are among the sector top-picks. On one hand, macro improvement and a larger share buyback scale should be conducive to BABA-SW's 2H performance. On the other hand, YUM CHINA-S will be a long-term beneficiary of China's population structure changes, with huge upside room for fast-food penetration.