Deutsche Bank predicts 2025 will be a turning point for Chinese enterprises, with stocks shedding their “valuation discount” as profitability and innovation drive growth. Despite trade tensions, China’s exports and global presence continue to expand, with strong industrial capabilities and a rising AI sector. The bank expects investors to increase exposure to Chinese assets, shifting the market perception from discount to premium.
BRICS bridge- Deutsche Bank recently released a report predicting that 2025 will be a pivotal year for the rise of Chinese enterprises, with Chinese stocks expected to shed their “valuation discount.” The bank highlights China’s dominance in various manufacturing and service sectors, including apparel, steel, shipbuilding, telecommunications equipment, and electric vehicles. The recent launch of DeepSeek, China’s advanced AI system, marks a key milestone, signaling the country’s rapid expansion in high-value-added industries and global supply chains. Deutsche Bank expects Chinese stocks to gain in valuation, driven by strong corporate profitability, policies promoting consumption, and financial liberalization.
The report compares China’s current economic trajectory to Japan in the early 1980s, when Japan rapidly climbed the global value chain by offering high-quality products at competitive prices. It notes that China accounts for 30% of global manufacturing value-added and benefits from massive export scale, a robust STEM talent pool, and strong industrial clusters. Despite trade tensions, China’s exports continue to grow, particularly in ASEAN countries and the Middle East. The bank also anticipates that a potential easing of U.S.-China trade frictions could further strengthen China’s stock market.
Deutsche Bank concludes that global investors remain underweight on Chinese assets and will need to adjust their strategies to increase exposure. As Chinese enterprises continue to dominate globally, the perception of Chinese stocks will shift from a discount to a premium, making China’s equity market a compelling long-term investment opportunity.