China, as the second largest economy in the world, has a huge influence on the fortunes of many ASX shares.
On top of this, the country has also been very topical among investors to start 2023 as it has recently made many significant policy changes.
Towards the end of last year, the ruling Chinese Communist Party backed down from its strict zero-COVID stance. While spurring a surge in coronavirus cases in the short term, the move is expected to be economically beneficial in the longer run.
The analysts at Firetrail, in a memo to clients, also noted other announcements following that reopening.
“President Xi wants the population ‘to consume based on a stable income, dare to consume without worries, and have a good consumption environment with a strong sense of gain and strong willingness to consume’, which could benefit Australian companies selling [products] into China.”
50% fewer Chinese students in Australia now than pre-pandemic
The thawing of diplomatic relations between Australia and China will also potentially restore exports of items like lobsters and wine.
But one export channel that has already opened up is education, thanks to a massive ruling out of Beijing.
“China will no longer recognise academic degrees and diplomas achieved through online study, which could increase the flow of students to Australian universities,” read the Firetrail memo.
According to Shaw and Partners portfolio manager James Gerrish, there is one particular stock that could see a windfall from this development.
“We like IDP Education Ltd (ASX: IEL), this global student placement business, moving into 2023 as the world moves on from COVID and Chinese students return to Australian classes,” he said in a Market Matters Q&A.
The IDP share price has already risen around 17% since 20 December.
But Gerrish believes there is still plenty of upside to be fulfilled.
“There are 50% fewer Chinese students in Australia than in 2019, illustrating the huge room for improvement.”
The stock closed Wednesday at $31.07. Gerrish favours buying at this price.
“We like the risk-reward on IDP Education below $32 targeting a move back towards $40, or 25% higher.”
The post Double the customers in 2023? The ASX share one expert would pounce on now appeared first on The Motley Fool Australia.
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More reading
- Here are the top 10 ASX 200 shares today
- Buy these 2 ASX 200 shares growing earnings as we speak: expert
- 3 ASX shares to cash in on China’s reopening to the world: Jun Bei Liu
Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended IDP Education. The Motley Fool Australia has recommended IDP Education. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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