China: Risk-reward supported by policy floor – Societe Generale

Societe Generale strategists see a better risk-reward balance in China equities. The recent correction has improved the outlook, particularly for onshore technology. National Team purchases and renewed buyback incentives point to a policy floor, in their view. Technology, Onshore China and Large Caps remain the team’s preferred exposures, while AI internet platforms stand to benefit in the near term.

China equities: Onshore technology drives valuation reset

"The recent correction has reduced valuation excesses, particularly in onshore technology."

"National Team purchases provide market support, while the revival of buyback incentives signals policymakers’ willingness to step in when markets come under significant pressure."

"Together, these measures reinforce investors’ perception of a policy floor."

"In the short term, AI internet platforms should benefit from the rebound in US hyperscalers."

"Over the longer term, we retain our preference for Onshore Technology, which provides diversification at a time of growing questions over the sustainability of the global AI build-out."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Find out more.)