China: Policy floor supports risk-reward – Societe Generale

Societe Generale strategists see improving risk-reward in China equities after a recent correction, especially in onshore technology. They highlight National Team purchases and revived buyback incentives as evidence of a policy floor. The team maintains a preference for Technology, Onshore China and Large Caps, with AI internet platforms benefiting near term.

Onshore technology leads 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. Know more.)