Navigating China's Economic Landscape: Analysts Highlight Promising Stocks Amidst Policy Shifts

As China grapples with a sluggish domestic economy, investment analysts have identified a host of Chinese stocks that hold promise, regardless of the impact of the latest policy measures introduced by the People's Bank of China. These stocks, spanning various sectors, have caught the attention of analysts who see potential for growth and resilience in the face of economic challenges.

Unlocking Opportunities Amid Economic Uncertainty

Boosting Lending and Cutting Rates: The Central Bank's Moves

On Tuesday, the People's Bank of China announced a series of steps aimed at reviving the country's slumping economy. These measures included slashing the reserve requirement ratio, the amount of cash banks need to hold, to boost lending, as well as cutting other corporate and household rates, including existing mortgages. The market responded positively, with the CSI 300 Index climbing 4.3% on Tuesday, its best day since July 2020, and Hong Kong's Hang Seng Index also rising more than 4%.

Screening for China Stocks with Analyst Praise

Regardless of the success of these latest policy steps, CNBC Pro has identified a selection of Chinese stocks that analysts recommend based on their merits, irrespective of the pace of economic growth at home. The screening process focused on stocks that meet the following criteria:- Member of the SPDR S&P China ETF, which tracks publicly traded companies domiciled in China and available to foreign investors- Market capitalization of at least $1.5 billion- Covered by at least eight analysts- Buy ratings from at least 55% of those analysts- Upside to average price target of at least 20%

Biopharmaceutical Breakthrough: Structure Therapeutics

One of the stocks that caught the analysts' attention is Structure Therapeutics, a biopharmaceutical firm. Shares of the company are up about 4% this year, and it has a market capitalization of $2.5 billion. All of the analysts covering the stock rate it as a buy, and the upside to the consensus price target is around 104%.Structure Therapeutics' lead pipeline asset, GSBR-1290, is an oral GLP-1 treatment similar to diabetes and weight loss drugs such as Ozempic and Wegovy. According to Morgan Stanley analyst Terence Flynn, the drug's profile is competitive with other oral diabesity drugs on the market and in development, and the company could see a catalyst with the expected release of Phase 2b obesity data by the end of 2025. Flynn initiated coverage of the stock with an overweight rating and a $118 price target, implying a potential upside of 168%.

E-commerce Dominance: Pinduoduo (PDD)

Another stock that caught the analysts' attention is Pinduoduo (PDD), the parent company of the e-commerce platform Temu. With a market capitalization of around $158 billion, PDD has garnered buy ratings from about three-quarters of the analysts covering the stock, and the consensus price target suggests a potential upside of roughly 43%.Despite a 22% year-to-date decline in the stock price and a 28% single-day plunge in August due to disappointing second-quarter results, some analysts remain bullish on PDD's long-term prospects. Ben Harburg, the founder and portfolio manager of CoreValues Alphan, told CNBC's "Squawk Box Asia" that he believes PDD will be "edging back upward" in the months to come, as the business is "incredibly strong" and not just doing well in China, but also dominating in emerging and mature markets.The announcement of the latest policies to revive the Chinese economy on Tuesday saw PDD's U.S.-listed shares jump more than 11%. However, the company had also faced earlier setbacks, with a new proposed rule from the Biden administration designed to target companies that "overuse and abuse" a U.S.-China trade loophole driving the stock lower in September.

Diversifying the Portfolio: TAL Education Group and Full Truck Alliance

In addition to Structure Therapeutics and Pinduoduo, the list of favored China stocks includes other names that have caught the analysts' attention. These include online learning and tutoring provider TAL Education Group, as well as digital shipping platform Full Truck Alliance.By diversifying their portfolios with a range of Chinese stocks that have garnered analyst praise, investors can potentially navigate the country's economic landscape and capitalize on opportunities, regardless of the impact of the latest policy measures introduced by the central bank.