China’s strict Covid-19 control measures have weighed on the country’s economy since the outbreak of the pandemic. Now, the easing of restrictions is raising hopes of a resurgence. Until recently, China remained steadfast in its Covid-free policy even as countries around the world adopted a “living with the virus” approach. But since then, it has relaxed its approach, with various cities announcing that passengers no longer have to present test results to travel. Beijing has also begun to dismantle test booths in the city. Investors cheered the easing of restrictions. China’s CSI 300 index, which tracks the largest stocks listed on the mainland, has gained 5.8 percent since China announced a reduction in the quarantine period for travelers on Nov. Hong Kong’s Hang Seng Index rose 18.9% year-on-year. And it’s not just the reopening that fuels market optimism. In recent months, China has announced a series of measures aimed at stemming the worst property slump in the country in decades, stoking hopes for a change in a sector that has been hit hard. surround. Wall Street is paying attention. Morgan Stanley offered an upbeat view on Chinese stocks for the first time in nearly two years, lifting China’s rating to outperform emerging-market stocks on Dec. embarking on a “clear path towards reopening”. UBS also sees a “stronger 2023″ for the Chinese economy. The bank said in a December 15 note that although it expected economic activity to remain weak over the next few months, China should record economic growth of 4.9% for 2023. , up from the bank’s previous forecast of 4.5%. ‘Good long-term game’ John Leiper, chief investment officer at Titan Asset Management, thinks now could be a good time for investors to buy Chinese stocks. “Recent trends in Covid-free policy, catalyzed by recent protests, represent a meaningful shift that Beijing will struggle to reverse politically,” Leiper told CNBC Pro. treat”. “In this context, valuations appear to be cheap historically and globally relative to their peers. When we look at pricing, historical bear markets tend to last around roughly the same length of time. one year with an average drop of about 40%.This sell-off was longer in magnitude and longer than this average and when you look at the short-sell rate, from a contrarian sentiment perspective, this could be good time to enter the market,” he added. Leiper believes that Chinese stocks represent a good long-term game thanks to solid structural dynamics, overly negative sentiment and attractive valuations. The Chinese government is also willing and able to provide additional support when needed, he added. Meanwhile, Goldman Sachs estimates a full reopening could boost Chinese stocks by 20%. “If our estimates are correct, the ‘reopening benefit’ could be as much as $2.6 trillion… by equity market capitalization,” said Goldman strategist Kinger Lau. in a report in November, before China eased its Covid-19 prevention measures. HSBC is another big bank that is bullish on Chinese stocks, saying that “after a rough year, things can only get better – and we believe they will.” “In our view, the recent pivoting policies to ease Covid-19 restrictions and provide support to the real estate sector have set the stage for a resurgence in the Chinese stock market. A more dovish Fed policy from early next year would also help, wrote Markets Steven Sun, Head of Research at HSBC Qianhai on Dec. 13. The bank said it prioritized sectors high-quality growth and still favors industries, consumer discretionary, consumer staples, and healthcare.It also expects large-cap stocks to “return” next year. 2023 due to improved global liquidity conditions and a better domestic economic environment.In a December 14 note, Morgan Stanley said the market is not yet fully priced in the post-Covid reopening. -19. The bank added that it will see the possibility of further price appreciation through a strong earnings recovery in 2023. The bank recommends that customers continue to Australia more with Chinese shares abroad, as well as reopening beneficiaries, especially names in the consumer discretionary sector. — Michael Bloom of CNBC contributed to this report.