China eased some of its COVID-19 restrictions last week after facing a public backlash to the country’s rigorous “Zero-COVID” policy.

As COVID rules ease, fund managers are now bullish on Chinese equities for 2023, forecasting a rally for shares, reports Bloomberg.

Almost 60% recommended buying Chinese stocks, while 31% said they were a sell, according to a survey of 134 fund managers by the media outlet.

The survey found that the country’s post-COVID reopening and easing of geopolitical tensions keep most fund managers interested in Chinese equities. The fund managers also see China’s stocks as attractively valued.

Some Chinese stocks that could benefit from the bull market are e-commerce giants like alibaba group holding ltd BABA and JD.Com Inc JD and EV manufacturers including Xpeng Inc XPEV and Nio Inc NEVER.

Also read: 3 Chinese stocks driving China’s rollback of COVID-19 restrictions

However, some fund managers said they were unsure about the country’s policies and regulations, which could pose risks to Chinese equities.

The MSCI China Index is trading at 11 times forward earnings, below the average over the past five years. Additionally, the index is still well below pre-pandemic levels, Bloomberg reported.

“It seems like there is a development towards China in terms of their Covid approach,” Ben PowellAPAC Chief Investment Strategist at this BlackRock Investment Institute, the news outlet said.

JPMorgan strategist spoke about the prospects for China in 2023 Marko Kolanovic said he was still positive on the country given the favorable monetary policy Conditions and an eventual full reopening.

The chief economist for China at Nomura in Hong Kong, Ting Lu, said China’s economy will contract by 0.3% in the fourth quarter compared to the third. The Wall Street Journal reported that it lowered its full-year growth forecast to 2.8% from 2.9%.

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