Goldman Sachs has identified a number of Chinese stocks to buy after the government announced a number of major fiscal stimulus measures this week. “The window for the ‘China trade’ has opened,” its analysts led by Kinger Lau said in a July 26 research note. “At the stock level, we emphasize a select group of GS Buy-rated companies that appear well-placed in stimulus-exposed areas, notably the platform economy, consumer services, electric vehicle supply chain, renewables, hi-tech manufacturing, new infrastructure, and late-cycle property plays.” China’s Politburo, the decision-making body of the country’s Communist Party, held its July meeting on Monday. It pledged to “adjust and optimize policies in a timely manner” for its beleaguered property sector, along with other measures designed to boost domestic consumption demand and resolve local debt risks. The event typically sets the tone for the country’s economic policies for the second half of the year, and Goldman noted that initial market reaction to the meeting was positive. The bank added that it expects Chinese stocks to “trade better” in the coming months. “The post-event market price actions are encouraging, but policy follow-through and implementation is required to sustain the recovery trade,” its analysts noted. A ‘tactical bounce’ Goldman said that, although structural growth concerns remain, the meeting “reaffirms our view that the policy put has been activated, and the window for a tactical bounce for Chinese stocks is now open.” Goldman screened for buy-rated stocks in several areas related to China’s policy announcement, including internet giants Tencent and JD , as well as its medical platform JD Health . In real estate, Goldman is buy-rated on property software company Beike and on mobile components company BYD Electronic as well as online recruitment firm Kanzhun . Search engine giant Baidu and drinks company China Resources Beer are also picks of the bank, and appear on its Asia-Pacific conviction list of top buy-rated stocks. — CNBC’s Michael Bloom and Clement Tan contributed to this report.
