Guide to China 1Q 2024
Are Chinese equities finally cheap enough? And are there EM opportunities beyond China?
2023 marked a third consecutive year of double-digit declines for Chinese equity markets, now down 60% from their early 2021 highs. Foreign investor outflows increased in the later part of 2023, with Chinese equities at decade low allocations in global portfolios. As a new year is about to begin in China, investors wonder: What will turn sentiment around? Are valuations cheap enough to justify the uncertainty ahead? Key issues for investors to consider include:
- Tracking all the recent monetary, fiscal and quasi-fiscal policy support
- Monitoring the stimulus’ impact on household and private business confidence and spending
- Looking for signs of stabilization in the housing market and deflationary pressures
- Gauging signs of peak pessimism on valuations, flows, and positioning
- Rethinking the way to invest in China and broader EM