Chinese stocks are coming back in favor as easing COVID-19 restrictions in Shanghai and stimulus measures to revive a pandemic-hit economy prompt investment banks to upgrade their views on a market pounded by fears of a sharp economic slowdown. The Shanghai SE Composite index has shed 12.5% so far this year, while the tech-heavy Hang Seng Index has declined 8.5%. Investment Commentary on China equities banks Nomura "Cautiously optimistic" and rates stocks "overweight" as it sees significant valuation support after large drawdowns; likely GDP recovery in the second half of the year; worst of regulatory crackdowns "likely behind us" JPMorgan Upgraded Chinese internet shares in mid-May; expects "significant uncertainties" faced by the sector to abate UBS China stocks to benefit from ramping up of stimulus, targeted government support of sectors like tech and property and downtrodden valuations Schroders Expects outlook for China to be brighter in 2023 and a rebound, albeit from a low base as various clouds continue to overshadow outlook * Amundi China's stocks may outperform as potential positive catalysts loom; eyes potential rollout of a homegrown mRNA COVID-19 vaccine and any reopening steps taken later this year Citi Says it still wants to have some China risk, with the country being the only major market where authorities are at least marginally supportive Source: Research notes from banks, *media reports (Reporting by Bansari Mayur Kamdar and Shreyashi Sanyal in Bengaluru; Editing by Maju Samuel)