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Why China-Related Stocks Are Looking Like Bargains
CNBC.com | December 03, 2012 | 02:15 PM EST

China could be closing a rough year in at least a somewhat better light, as investors are beginning to buy into the theme that markets there may be nearing a bottom.

Stocks with high exposure to China got clobbered this year as investors worried that the world's primary engine of growth was slowing and likely to drag down everyone else.

But with a huge bite already out of the country's stock indexes, sentiment is taking root that the nation could be worth another look, at least as a value play.

"Long-term, whether the actual economy in China is growing 3, 4, 5, 6 or 7 percent, all of these are faster than the U.S., Europe, and Japan are growing," Adam Parker, chief market strategist at Morgan Stanley, said in a note. "So, our judgment is that negativity on China is quite high and that there is potential for more optimistic news on the policy front over the next few months."

Investors got some mildly positive news Monday when China's Purchase Managers Index broached the critical 50 barrier, registering a 50.5 that signals expansion rather than contraction. It was the first time in more than a year that the PMI crossed that line. (Read More: Factory Surveys Show China Reviving, Global Rebound Fragile )

As production has slumped, Chinese stocks have taken a hit.

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