More upside for Chinese stocks: Read By Investing.com

Investing.com — Citi analysts remain bullish on Chinese stocks, citing significant upside potential even after a recent rebound to year-to-date highs.

Following the Chinese government’s announcement of economic stimulus measures, Citi’s China equity strategy team remains bullish, forecasting further gains as further stimulus packages are expected.

According to Citi, the government is likely to introduce a RMB 3 trillion consumption support package, adding to the already positive impact of the recent stimulus.

“We remain bullish because Chinese equity valuations are still low relative to emerging market equities, even after the past three weeks of share price gains,” the analysts noted.

The bank explains that Chinese stocks have room to rise further, especially as the economy continues to receive support.

Citi also raised its end-June 2025 targets for major Chinese stock indexes by more than 20%. Now they expect it to reach 26,000, the CSI 300 to reach 4,600 and the Index to rise to 84.

The upward revision is said to highlight the potential for continued gains in the Chinese market.

Additionally, Citi believes the next earnings season, from mid-October to early November, could lead to upward revisions to FY25 earnings forecasts, providing further impetus for Chinese stocks.

“We see potential for Y25 earnings forecasts to be raised,” the report said, signaling that the market may continue to outperform in the near term.

Elsewhere, the bank said it saw “Chinese economic stimulus as broadly positive for Japanese equities, with names that have high exposure to China or a high correlation with Chinese equities particularly promising.”