Investment bank Bernstein picked a raft of Chinese and Indian stocks in sectors including tech, pharma and IT, naming them on a list of “opportunities for value, growth and quality.” “Our preferred portfolio of high yield stocks and momentum names are well positioned for a global recession, a midcycle recovery in Asia and a rate hike/pause in US,” the analysts led by Rupal Agarwal wrote in a research note dated July 31. All of its picks are rated “outperform.” “We believe that it is time to increase risk exposure in China by adding more high volatility stocks,” the analysts wrote. The bank chose Chinese internet giant Tencent , stating: “The business is back on track with high-single digit or better gaming growth going forward [and] ad revenues which should accelerate on a two-year stack.” It also picked e-commerce platform Meituan , describing its position versus competitors as “very robust.” It added: “At this point Meituan’s valuation premium over peers has completely collapsed … One for the contrarian investor.” Pharma company Wuxi Biologics is also on Bernstein’s list. “Wuxi continued to gain market share in new biologics entering global pipeline in the past few years, demonstrating that geopolitical tension hasn’t materially impacted Wuxi’s ability to onboard new clients,” the analysts wrote. Bernstein also chose Chinese internet giant Baidu , saying generative AI is set to give the company’s strategy “a new lease on life.” “GPT can accelerate development of its business and give the company the tailwinds to reshape its strategy,” the analysts wrote. Indian stock picks Indian drug company Sun Pharma is also on Bernstein’s list of outperform-rated stocks. It “had a strong 2022 and continue[s] to do well on multiple fronts. In India … they have outperformed the market,” the analysts wrote, and they also praised Sun’s specialty drug portfolio in the U.S. The analysts chose Infosys , a Bangalore-based IT consultancy. “Infosys remains our preferred stock in the sector & will benefit as demand recovers,” the bank said. Reliance Industries , a multi-industry Indian conglomerate is a Bernstein pick for its investments into retail and telecom infrastructure, the analysts said. “Its online platforms like Ajio and JioMart are some of the most popular online retailing destinations, while its New Commerce B2B initiative has [around 3 million-plus] partners,” the bank stated. “Our preferred investment strategy for Q3 2023 in Asia is to have a balanced approach by investing in both value and momentum stocks while betting against underperforming stocks,” Bernstein’s analysts said.
