The recent positive performance by Chinese equities has been mainly driven by a modest improvement in macroeconomic data, the government’s continued support for the property sector (impacting consumer sentiment) and foreign investors’ increased positioning in the market.

In this CIO Special – 'China: growth key to market upside' we evaluate, how recent momentum could continue in the short term on the back of this shift in sentiment and flow allocation, although our preference would be to see more robust stabilisation in macroeconomic data first. The ongoing re-evaluation of China by investors supports our expectations of a broad and sustained recovery in Chinese equities in H2.

 

 

Key takeaways:

  • China’s manufacturing sector is staging a modest recovery. Consumption continues to improve but the property market remains weak.
  • Tactically there could be some more momentum left in Chinese equities, but the property market will continue to provide a drag.
  • The ongoing re-evaluation of China by investors supports our expectations of a broad and sustained recovery in Chinese equities in H2.

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The CIO Special below is available to download. Please refer to the Important Information at the end of the memo for disclosures and risk warnings.

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