Please note: this article is more than one year old. The views of our CIO team may have changed since it was published, and the data on which it was based may have been revised.
In this CIO Viewpoint – China Equities: Market recovery pushed back further – we assess the impact on this asset class of domestic macroeconomic factors (e.g. deflationary trends and weak labour markets), related policy responses and Chinese export prospects. We do not see a near-term catalyst for the equities market overall, but investors may want to position in selected sectors for medium and long term opportunities.
Key takeaways:
- Deflationary trends and labour market concerns are among the issues weighing on domestic consumption. Foreign trade is a bright spot but the near-term outlook here is cautious.
- We recently downgraded our 2024 GDP forecast for China from 5.0% to 4.8% in 2024, while maintaining the 2025 GDP forecast at 4.4%.
- Chinese equities will likely move sideways in the near-term. But selected sectors could hold opportunities in the medium to long term, underpinned by pockets of growth.
