In late November, the Chinese people could not tolerate the oppressive zero covid policy. Protests erupted in over 50 cities.
The Chinese Communist Party or CCP listened. Last Wednesday, Dec. 7, it announced many changes to its covid policy. In a major shift, the CCP will restore economic activity. November’s slump is too severe. The world is facing more shortages and disruptions after China curbed output.
Investors unwilling to invest in China should look at sectors that could soar the most after the country eased lockdowns. In the basic materials market, steel demand might recover. Cleveland-Cliffs (CLF) is most attractive at a 3.4 times price-to-earnings multiple.
Freeport-McMoRan (FCX), a copper producer, could revisit new highs.
The energy sector should snap back. China’s lockdown hurt global demand. When manufacturing activity resumes, energy prices will rise. Investors might buy Exxon (XOM) or Chevron (CVX).
Consumers may spend more with the economic re-opening. Next month, the Chinese New Year could encourage more spending. This will help consumer discretionary companies. The consumer staples ETF (XLP) already rebounded. It could move higher from here.
Financial services firms, excluding fintech companies, benefit from global economic recovery. The Financial Select Sector (XLF) offers investors exposure to banks.
