There’s one upside to the slowdown of the Chinese economy: stocks are cheap.
So says Jason Yablon, global portfolio manager at Cohen & Steers. His firm manages the Renaissance Global Real Estate Fund.
Read: Don’t give up on China
China is decelerating mainly because it’s transitioning from depending on fixed-asset investments to depending on consumers, he adds. Since that switch is tricky, the country’s overall growth has been affected, along with many major Asian markets such as Hong Kong.
Still, investors can look for stocks that are trading below their true values. Right now, “there’s a lot of value…in Chin[ese] homebuilders,” says Yablon, since “everyone’s been talking about the impact of deceleration” on the real estate sector.
People should be cautious when choosing stocks, however, due to concerns about liquidity and housing prices. Yablon’s hedged his bets by focusing on large companies that have access to capital since “for them, liquidity hasn’t been an issue.”
He notes, “They’re the best and largest homebuilders in China. [They’re] gaining market share as liquidity tightens up for some of the fringe players” that are having trouble competing in the space.
On average, he finds real estate sector valuations are even cheaper now than during the 2008-2009 downturn.
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