HSBC Holdings Plc analysts have turned bullish on Chinese stocks, arguing the worst of a regulatory storm has passed and that China will provide policy support to arrest slowing growth. HSBC said Tuesday it had upgraded its recommendation on Chinese equities to “overweight” from “neutral,” joining a small but growing chorus of investors who reckon the tide is beginning to turn. “We think the baby is being thrown out with the bathwater,” the HSBC analysts said in a report which had Herald van der Linde, head of the bank’s Asia-Pacific equity strategy, as its lead author. “Yes, China is struggling with growth, and a stronger dollar is not good news for China’s stock markets. But that’s now well-known and is priced in,” the report said. This year, MSCI’s China index has fallen about 12 percent compared with a 15 percent rise in MSCI’s world stocks index , as regulatory moves spanning technology firms’ behavior to property borrowing have pounded share prices. HSBC is among a few in the financial sector calling time on the selloff. Asset manager BlackRock said a month ago it was dipping its toes back into Chinese equities. On Monday, strategists at Citi Private Bank also said they were modestly overweight on Chinese equities, while analysts at Goldman Sachs unveiled a “Common Prosperity” portfolio which they said had been insulated from regulatory risks. “As growth is slowing, we expect the Chinese Government to introduce more targeted easing measures in the coming months,” said the HSBC analysts. “As for regulations, which have battered the China internet sector so much this year, they tend to come in cycles ... the focus eventually shifts to growth and stability.” (SD-Agencies) | 