Guide to China 1Q 2023
Have Chinese markets finally turned a corner?
After more than two brutal years, Chinese equities are up 54% since their October lows, while the Chinese Yuan is stronger by 7%. Chinese policymakers' more pragmatic turn at the end of 2022 has contributed to a turn in sentiment, flows and performance. Several changes occurred late last year that investors should not ignore: additional support to the real estate sector, easing off of new regulations of the technology sector, better tone with the rest of the world—and crucially, a rapid end to “Zero COVID policy". Investors should consider the following key questions as they re-assess their exposure to China in the year ahead and beyond:
- What are the economic and investment implications of China's reopening?
- How much of a rebound can occur in housing?
- How should investors think about the recent turn in regulation and in foreign policy tone?
- After the expectation for consumption recovery is priced in, what should investors focus on?