China Stocks Could Enter Bull Market in 2024 | ETF Trends

In the Chinese zodiac, 2024 is the year of the dragon. For stocks in the world’s second-largest economy, next year could be the year of the bull, as some major global banks are forecasting a resurgence by China equities.

Should that thesis prove accurate, a variety of exchange traded funds stand to benefit, including the KraneShares MSCI All China Index ETF (KALL). The fund, which turns nine years old in February, follows the MSCI China All Shares Index. That’s a broad gauge of Chinese stocks trading in Hong Kong, Shanghai, and the U.S.

That depth is a potentially alluring trait as 2024 beckons, because some experts back the idea that it will be both Hong Kong- and mainland-listed A-shares that rally next year. Should that happen, KALL stands to benefit, as the ETF is home about 200 stocks.

Call on China ETF KALL in 2024

As of December 4, the widely observed MSCI China Index is lower by 11.75% year to date. A gloomy performance to be sure, but there is a silver lining. The gauge trades at its lowest earnings multiples in more than five years. Translation: Investors don’t have to pay up to bet on KALL rebounding in 2024.

“This is a great entry point to get invested into the Chinese market,” said Hayden Briscoe, head of Asia-Pacific multi-asset portfolio management and head of asset management in Hong Kong at UBS, in an interview with Jiaxing Li of the South China Morning Post. “China is going to have a much nicer recovery. Basically, a bull market.”

As the media outlet notes, UBS isn’t the only major global investment pointing to the possibility of a 2024 bull market for Chinese stocks. Count Fidelity, Invesco, and Lazard among that group, too. That confirms that, while KALL isn’t being specifically mentioned by those firms, if their outlooks are accurate, the ETF could deliver upside next year.

Some recent data points suggest market participants are buying into the aforementioned thesis. For example, global investors were net buyers of Chinese A-shares last week — to the tune of $220 million. That’s modest relative to the outflows seen in November. But it’s a starting point, and one that could pave the way for more upside.

Among the sectors and industries experts believe will drive the 2024 China bull market are consumer internet, banks, and healthcare. Consumer cyclical, financial services, and healthcare equities combine for over half of the KALL roster.

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