India stocks have run up so high that China looks relatively attractive, said Abrdn’s Xin-Yao Ng, Singapore-based investment manager of Asian equities. “Just take a fundamental view, there is a lot of value in China,” he said in an interview Friday. “But we don’t know how long we need to wait.” Until the Chinese economy rebounds, his strategy is to pick stocks. Official numbers show China’s growth has slowed from the pace of past decades. Chinese stocks have dropped over the last several months, with the Shanghai Composite trading near lows not seen since the early months of the pandemic in 2020. All this follows a year in which mounting concerns about China’s economy and lack of stimulus have kept investors on the sidelines. Abrdn’s Ng remains cautious on China and said the most important indicator is the property sector —especially transaction volume and prices. “Once that stabilizes, consumers can be more confident, households can be more secure about their financial status,” he said. But it remains unclear when that will happen. Ng doesn’t expect significant stimulus from the government in the months ahead. Chinese Premier Li Qiang signaled a restrained stance last week when he told a global audience at Davos that China “did not resort to massive stimulus” and “did not seek short-term growth while accumulating long-term risks.” What to buy In the meantime, Ng said he’s focusing on Chinese stocks with higher free cash flow yields — a measure of potential return — particularly for some internet names that have announced share buybacks. “In China, there are a lot of stocks giving you plus-10% free cash flow yield,” he said, noting that yield is only 1% to 2% for stocks in India. Though Abrdn is overweight on India and underweight China overall, Ng said. He said the firm is selectively taking some money out of India after its run higher , to put into China and some thematic plays. Abrdn’s funds include a China A Share Sustainable Equity Fund, which had $2.4 billion as of the end of November. Its top 10 holdings include Kweichow Moutai , Aier Eye Hospital and Mindray . “We’re selectively adding into things like sportswear,” Ng said, noting how outdoor activities have become more popular in China, helping Nike and brands owned by Chinese company Anta . Another area of selective buying is in healthcare stocks, he said. He said the firm expects companies like Mindray to emerge “much stronger” from China’s anti-corruption campaign in the sector – while offering a hedge with a growing export business. One category Ng said Abrdn is beginning to look more at is some export-oriented names, given expectations the U.S. economy will see a soft landing and create more demand than expected for Chinese goods. “We’ve started to hear some [industrial] names start to talk about rebounding orders, might be some green shoots,” he said. China’s exports grew faster than expected in December, but not enough to offset a decline for the year , the first annual drop since 2016. Nomura’s proprietary leading index on Asian exports, released Friday, signaled Asian exports could grow as soon as February. The index has climbed for four straight months to its highest since May 2022. But for China’s economy overall, a slew of concerns from geopolitics to an aging population remain. “Investors and companies would like a big stimulus, a big economic support, but the government doesn’t seem to think the economy needs that,” Ng said, noting that “in a downturn, you actually have to over-ease to break that downward spiral in confidence.”