© Reuters. China Sell-Off Disconnected From Fundamentals, Presents an Opportunity Says JPM’s Kolanovic
By Sam Boughedda
In a note to clients on Monday, JPMorgan analyst Marko Kolanovic said the China sell-off is “disconnected from fundamentals” and presents an opportunity.
U.S.-listed Chinese stocks have fallen during the session on fears over the country’s power shuffle.
“China growth data surprised positively over the weekend, but their equity market is selling off strongly today,” wrote Kolanovic in his research note on global markets. “We believe this is a good opportunity to add given an expected growth recovery, gradual COVID reopening, and monetary and fiscal stimulus.”
The analyst added that third and fourth-quarter earnings should confirm that fundamentals remain anchored in resilient labor markets and the COVID reopening, but the firm has cut its 2023 EPS estimates to flat y/y.
“Bonds were mixed last week, after sharp rises in yields in recent weeks. In the U.S., the curve steepened markedly after press reports that some Fed officials were concerned about over-tightening. We stay neutral on duration and the curve and hold longs in 5Y breakevens hedged with shorts in futures,” the analyst added.
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