Time to bet on Chinese exporters: Goldman Sachs
While China's exporters are reeling from weak external demand, Goldman Sachs recommends gaining exposure to the mainland sector now since it is set to benefit from a turnaround in the global economy, in particular a revival in the U.S. economy.
"China's exports have been highly correlated (correlation at 84 percent) with the global economy since 2000, despite less GDP [gross domestic product] reliance on net exports than before," strategists at Goldman Sachs wrote in a new report on the beneficiaries of the global recovery.
"The global recovery could be a multi-year investment theme and export-driven listed companies could benefit and outperform the market against the global economy's recovering backdrop," they said in a report.
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As the U.S. and euro zone economies stage a recovery, Goldman Sachs expects global growth to accelerate to 3.1 percent in the second half of 2013, from 2.7 percent in the first half, and to 3.8 percent in 2014, higher than the 10-year average of 2.6 percent.
The U.S. and Europe are China's second and third biggest export destinations, after Hong Kong, accounting for 16 and 15 percent of total shipments, respectively. While Hong Kong is the mainland's top export destination, at 19 percent, a significant portion of shipments into the city are re-exported to the West.
Despite China's dismal trade data in the recent months, Goldman believes the country's export growth will recover later this year. In June, exports declined 3.1 percent against forecasts for a rise of 4 percent - the first fall since January 2012.
It recently lowered its forecast for China's full-year economic growth to 7.4 percent for 2013 from 7.8 percent.
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The bank said some of the mainland's top export products - such as kitchen appliances, furniture, TV/telecommunications equipment, computers, toys, bicycles and textiles - are directly linked with the housing market in the U.S., and will therefore see higher demand as that sector recovers.
Companies to bet on
Goldman identified several mainland listed companies that could benefit from this theme. They include Shenzhen-listed hand tool maker Great Star, computer accessory producer Anjie Technology, wood furniture manufacturer Yihua Timber and agriculture chemicals firm Lianhe Chemical.
The bank noted that each of these companies has a market capitalization of above $4 billion yuan ($652 million), and derives 50 percent of their revenue from sales overseas.
—By CNBC's Ansuya Harjani; Follow her on Twitter