JPMorgan-ChinaHK_Equity_Strategy_Dashboard-114688753_33页_2mb

JPMorgan China Equity & Global Markets Strategy Analysis

Key Points

• China Market Review (April 7 - April 12, 2025):

  • Chinese equity indices (MXCN, CSI300) experienced severe sell-offs, breaking to extreme oversold levels.
  • Led recovery from Monday's shock due to factors like national team purchases (ETFs), central buybacks, policy easing expectations, and Trump's tariff stance.
  • Flows favored defensive sectors and domestic stocks with policy uncertainty.
  • The US raised import tariffs on Chinese goods to 125%, while exempting $390bn (including ~$101bn from China) worth of IT imports temporarily.

• Market Outlook (April 2025 - June 2025):

  • JPMorgan expects a potential "step back" amid re-escalating trade tensions after a "recovery."
  • Suggests ROTATION towards quality laggards like Energy, IT, and Utilities for potential upside after an initial pullback.

• Investment Recommendations:

  • Overweight (OW): Energy, IT, Information Technology (hardware).
  • Neutral (N): Discretionary (AI proxies), Healthcare, Materials, Real Estate.
  • Underweight (UW): Consumer Staples.
  • Bonds: Gold is expected to continue rising due to inflation concerns. US Treasuries face medium-to-long-term upside.

Market Targets (April 12, 2025):

• MXCN: JPMorgan target based on consensus EPS growth of 16% in 2025. Their base case target is 80 points, upside from current 67.
• CSI 300: Target based on 19% EPS growth in 2025. JPMorgan base case target is 3,751 points.

Catalysts (April 2025):

• Key catalyst dates involve China policy meetings, March macro data release, China's Politburo Meeting, US inflation and GDP data.

Valuation Concerns:

• US-China trade tension risks may impact flows and sentiment.
• Valuations need to balance growth (especially in export-substitution sectors) against potential market deleveraging. The Earnings Cycle shows EPS growth acceleration in China outperforming previous years.