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Ukraine Sanctions Risk Puts China Stocks in Valuation Trap – SCMP

What investors cannot price is the risk of sanctions on China’s biggest companies, SCMP reported


China stocks
China has refused to condemn Russia’s military aggression in Ukraine, while also publicly opposing the mounting Western sanctions on the Kremlin. That stance has presented a dilemma for Chinese firms operating in Russia, including Xiaomi, Sinopec and Alibaba Group Holding. Photo: Reuters

 

Chinese stocks are on “cheap sale” after a US$2.4 trillion sell-off in both onshore and offshore markets since Russia invaded Ukraine. What investors cannot price, however, is the risk of sanctions on China’s biggest companies, the South China Morning Post reported.

As a result, investors should favour markets that are least exposed to the secular US geopolitical conflict with Russia and China, according to strategists at BCA Research. The risk premium-compression trade, touted by strategists at Goldman Sachs, can possibly wait.

 

Read the full report: South China Morning Post

 

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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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