Trillion dollar fund manager says buy China stocks

Sydney: Investors should ignore pricey US stocks and turn to their cheaper Chinese peers instead, where further stimulus will help propel earnings growth, according to T Rowe Price.

Chinese shares trade at a discount and will benefit as authorities crank up efforts to promote the flow of credit in the world's second-largest economy, said Thomas Poullaouec, head of Asia Pacific multi-asset solutions for the $1.1 trillion asset manager in Hong Kong. By contrast, US shares are pricey and Federal Reserve stimulus is already well priced in by investors, he added.

“China is the one where we have a preference because of valuation and because of the expectation that Chinese stimulus can provide some uplift to earnings,” he said in a telephone interview. “China is committed to manage this cycle in a very prudent way with policy measures.”


The Shanghai Composite has risen about 9 per cent in the past month, the best performer among global peers, and money is flowing into China's equity market through its exchange link with Hong Kong. The S&P 500 Index has risen just 2 per cent with strategists such as Citigroup Inc. dialing back their US equity stance as the trade war and economic growth concerns weigh on sentiment.