UBS reveals global stocks that will win — or lose — when China reopens

Published Wed, Nov 30 20226:42 PM EST

Chinese stocks rose this week after the nation's health authorities reported an uptick in Covid-19 vaccination rates , which are regarded as crucial to reopening the country. A change in China's strict zero-Covid policy would reverberate across the world, particularly affecting large global companies with significant links to the world's second-largest economy. However, there remains uncertainty over when Beijing might ease its policy. But when they do, Swiss bank UBS has identified stocks in the MSCI Europe index that will do better than others "in an environment where China's growth rebounds." The investment bank screened for companies in Europe that meet the following criteria: A high percentage of sales exposure to China. Sensitive to changes in the China Purchasing Managers' import index. Displayed strong performance during growth periods of the PMI. The stocks in the table below have been ranked using UBS' composite score, which brings together the above factors. London-listed engineering groups IMI and Weir Group and Asia-focused bank Standard Chartered were among the top 15 stocks with high exposure to China, according to UBS. The list also includes European luxury brands Richemont and Kering , as they depend on demand from a growing affluent population in China. According to UBS, shares of chemicals and specialty materials companies BASF , Solvay , Arkema and Sika are also exposed. Those companies supply raw materials used in the manufacturing of goods in China. Other companies that also met the criteria include steelmakers Voestalpine , SSAB and ArcelorMittal , the owner of Tefal cookware brand Groupe SEB , and Swiss duty-free shops group Dufry . Least China-sensitive stocks Conversely, UBS also identified the least China-sensitive stocks for investors who want to hedge their portfolios or avoid the impact of an economic slowdown in China if Covid restrictions aren't relaxed in the near future. The table below shows five stocks, including Belgium electric utility company Elia Group , British water supplier United Utilities , French media giant Vivendi and European supermarket and retailers Colruyt and Ahold Delhaize .