China Stocks Get Boost As UBS, HSBC Cite Stimulus Hopes, Tariff Truce, Low Valuations

UBS Group expressed optimism about Chinese stocks, citing the recent tariff pause with the U.S., potential stimulus measures from Beijing and attractive low valuations as key drivers.

UBS’ stance coincided with a market sell-off in U.S. equities amid trade tensions, SCMP reported on Monday.

Alibaba Group Holding (NYSE:BABA) is considered a tech barometer of China. Other significant U.S.-listed Chinese stocks included Baidu, Inc (NASDAQ:BIDU), JD.Com, Inc (NASDAQ:JD), and PDD Holdings Inc (NASDAQ:PDD).

Also Read: US Listed Chinese Stocks Drop After Trump Renews Trade Tensions

Neil Hosie of UBS said Beijing’s economic policy measures in September and the emergence of artificial intelligence start-up DeepSeek’s affordable models sparked global investor interest in China equities, slowly translating into more significant fund flows.

Hosie said a 90-day tariff truce and Beijing’s hopes for domestic stimulus have translated into higher inflows into China’s markets.

Additionally, Hosie said Hong Kong’s resurgent initial public offering (IPO) market was a positive driver.

Meanwhile, Hosie said U.S. stocks were overvalued, citing the Nasdaq’s P/E of 31.70x, compared to Hong Kong’s benchmark Hang Seng Index at 10.86x and Shanghai’s main board at 15.60x, as per Bloomberg data.

Mainland Chinese households held 160 trillion yuan ($22 trillion) in cash, mostly invested in bank time deposits and about a third of it could flow into stock markets in Hong Kong as lower interest rates drive demand for riskier assets, SCMP reported on Monday, citing HSBC.

Herald van der Linde, head of HSBC Asia-Pacific equity research, told SCMP that close to 50 trillion yuan, deemed excess savings over the COVID-19 pandemic years, will find their way back into local and offshore equity markets.

HSBC said Chinese investors channeled $80 billion in net inflows into Hong Kong stocks through Stock Connect’s southbound channel in 2025. At the current rate, they could funnel more excess savings to drive purchases to $180 billion by the end of the year.

HSBC said most of the cash flowing into Hong Kong’s stock market had gone into high-growth sectors such as internet firms, electric vehicle (EV) makers, and other high-yielding companies like Tencent Holdings and Alibaba.

BABA Price Actions: BABA stock is up 0.76% at $114.70 at publication on Monday.

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