By Pella Funds chief investment officer Jordan Cvetanovski expects select names in China to do well next year even if the country does not make good on its promise of more fiscal stimulus in 2025.
The investment firm has taken its exposure to China to well over 10% in recent months.
Two stocks that it particularly recommends owning heading into the new year are Midea Group and the Shanghai headquartered AIA Group.
Let’s explore why Pella Funds likes these two Chinese stocks for 2025.
Midea Group Co Ltd (SHE: 000333)
Midea is an electrical appliance manufacturer based out of Foshan, China.
But the company has been actively integrating advanced technologies, including robotics, automation, and artificial intelligence, into its operations.
Midea’s focus on digital transformation and intelligent solutions positions it to benefit from rapid growth in AI that Statista forecasts will be a $1.0 trillion market over the next ten years.
In November, Midea reported better-than-expected earnings for the third quarter as revenue popped 9.5% on a year-over-year basis. So, the financials support Pella Funds’ investment thesis as well.
Midea stock has already rallied a whopping 40% this year but Jordan Cvetanovski is convinced that it’s still trading at an attractive valuation.
His optimism is broadly shares among Wall Street analysts as evidenced in their consensus “buy” rating on Midea Group at writing.
Finally, Midea shares currently pay a dividend yield of 3.93% that makes it all the more attractive to own for the long term.
AIA Group Ltd (HKG: 1299)
Another name that Pella Funds owns and is bullish on for the coming year is life insurer AIA Group.
Jordan Cvetanovski sees the Hong Kong headquartered firm as one of the “best quality companies within the region.”
AIA stock has lost about 25% over the past two months, which has created a solid opportunity for investors to own a quality name at a deep discount, he added.
Pella Funds owns AIA Group as it has executed well year in year out. If shares of this life insurer were listed in the United States, they would have been trading at a much higher multiple at writing, according to Jordan Cvetanovski.
In late October, AIA Group said solid demand for its products drove record value of new business in its third financial quarter.
At the time, CEO Lee Yuan Siong told investors:
Our continued focus on executing our strategic priorities has further enhanced AIA’s competitive advantages, supporting double-digit VONB growth from both our agency and partnership distribution channels.
Much like Midea stock, AIA also pays a healthy dividend yield of 2.88% at writing that makes them worth owning for 2025.
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