(Bloomberg) -- Beaten-down Chinese equities may have an opportunity for gains with the possible upcoming meeting between leaders of the US and China next week, according to the chief investment officer of Templeton Global Investments. 

“In the very short term in China, we could have a catalyst with the potential upcoming meeting between President Biden and President Xi — with a bit of luck that happens in San Francisco next week,” Manraj Sekhon said in a Bloomberg TV interview on the sidelines of the Bloomberg New Economy Forum in Singapore. “That could provide a temporary floor in China equities.”

China’s stocks are reeling from the years-long debt crisis and an exodus of foreigners, who are withdrawing money at the fastest pace since 2015. The MSCI China Index has fallen almost 10% this year and ranks among the world’s worst performers.

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US Treasury Secretary Janet Yellen and her Chinese counterpart will hold two days of talks in San Francisco this week, a step toward more normal ties ahead of a long-anticipated meeting between the leaders of the world’s two largest economies.

It would “improve sentiment, which is pretty weak right now,” Sekhon said. “At the margin we are adding to those” long held positions in China listed stocks, particularly in the industrial, green energy, electric vehicles and internet space.

As the Federal Reserve signaled its almost two-year long tightening cycle may be coming to an end, select emerging markets where valuations are relatively low may present structural opportunities, Sekhon said. 

“As rates peak, as the pressure on the dollar eases, we think the liquidity around the world will be looking for higher yield, higher growth, long-term structural growth,” he said. 

He added that he prefers India and Japan, as the latter should benefit if global inflation is sticky even as uncertainty remains on the Bank of Japan’s policy moves. “We think Japan’s a good hedge in terms of allocation to your portfolio when inflation is staying high,” he told Bloomberg reporters on the sideslines of the conference.

The New Economy Forum is being organized by Bloomberg Media Group, a division of Bloomberg LP, the parent company of Bloomberg News.

--With assistance from Haidi Lun.

(Updates lede to reflect Sekhon’s updated title. An earlier version updated with more details from fifth paragraph.)

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