Stocks to pick amid China slowdown

Singapore

CHINA'S rebalancing story is churning out policy beneficiaries while healthy growth in household disposable incomes is keeping consumer-oriented sectors relatively robust.

And with its domestically listed stocks trading closer to the lower end of the valuation range, these factors are reasons enough to maintain an "overweight" view on China, according to BNP Paribas managing director and Asian equity strategist Manishi Raychaudhuri.

For him, it would seem that concerns over China's slowdown are overblown. "Despite the fact of China slowing down, it is possible to identify a good set of stocks there, which will generate alpha for investors," he told BT in a recent interview.

The country's economic rebalancing essentially entails moving away from the old traditional sectors like industrials and manufacturing to consumption and services. Based on CEIC data, investments and credit injection are no longer supporting GDP (gross domestic product) growth; over-capacities created after the global financial crisis have raised the incremental capital output ratio (ICOR) - the marginal amount of investment capital necessary to generate the next unit of production - to almost three times pre-cri…