China: Risk-reward balance benefits from policy floor – Societe Generale

Following a recent correction, particularly in onshore technology, the risk-reward balance for Chinese equities looks more attractive to Societe Generale strategists. 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.

Correction eases valuation excesses in onshore technology

"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. Learn more.)