Aberdeen: After a significant rebound in the Chinese stock market, valuations still appear significantly lower than those of U.S. stocks
Pruksa Iamthongthong, Deputy Head of Asia Pacific Equities at Aberdeen, stated that the Chinese stock market is at a turning point, influenced by market sentiment, macro policies, and advancements in AI technology. Although the stock market has rebounded, valuations remain lower than those in the U.S., with a price-to-earnings ratio of 13 times compared to 24 times in the U.S. Global capital allocation to the Chinese market is close to historical lows, providing investment opportunities. The MSCI China Index has risen approximately 19% year-to-date, and market earnings forecasts have been revised upward, especially for technology companies
According to the Zhitong Finance APP, Pruksa Iamthongthong, Deputy Head of Asia Pacific Equities at Aberdeen, stated that the Chinese stock market is beginning to enter a turning point. This trend is supported not only by market sentiment but also benefits from positive macro policies, breakthroughs in AI technologies such as DeepSeek, as well as attractive valuations and earnings upgrades. Aberdeen noted that despite the recent significant rebound in the Chinese stock market, its valuations remain significantly lower than those of the U.S. market.
Currently, the price-to-earnings ratio of the Chinese market is 13 times, while that of the U.S. market is as high as 24 times. Considering that global capital allocation to U.S. stocks has reached a historical high, while allocation to the Chinese market is close to a historical low, this valuation gap provides important opportunities for investors, especially against the backdrop of strong growth potential and profitability in China.
Aberdeen pointed out that this year, the Chinese stock market has welcomed its best annual start in history, with the MSCI China Index rising approximately 19% year-to-date, outperforming developed markets and emerging markets by 18 and 14 percentage points, respectively. The Chinese stock market has surged 29% from its low to its peak, marking the third-largest rebound in history, second only to the recoveries following the global financial crisis and the economic restart after the COVID-19 pandemic.
Aberdeen observed that market earnings forecasts have been adjusted upward, particularly for the consensus expected earnings of Chinese offshore technology companies for 2025 and 2026. Since the Lunar New Year holiday, there has been a noticeable improvement in the capital allocation and investment portfolio flows of both international and Chinese investors