Hello, my name is Mary Park Durham, and I am a research associate at J.P. Morgan Asset Management here with a China data recap.
So far, 2024 has been a better year for China compared to the last three. First quarter GDP came in above expectations at 5.3% year over year. However, yesterday’s retail sales and industrial production release for April was mixed. Retail sales rose a mild 2.3% year over year below expectations, and industrial production beat consensus, rising 6.7%. This suggests that the consumer recovery may lack momentum, but industrial activity remains robust.
Chinese equities have been in the headlines recently due to their impressive 30% rebound since the January low. We now seem to be in the middle of a tactical rebound in China, but many of China’s economic problems have not been fully resolved. Therefore, this strong performance may not last. For any rally to be sustainable in China, investors need to be convinced there is potential for fundamentals to materially improve. Crucially, it will be important to see stabilization in the housing market and an improvement in business and consumer confidence.
However, the government’s recent support for the economy has been encouraging. China’s central bank announced that it would purchase bonds in the secondary market to manage market liquidity and hinted at easier monetary policy going forward. Additionally, the federal government is about to kick off its previously announced program for strategic projects around the country, totaling 1 trillion yuan or USD 138 billion. Since the additional issuances will take place this year, we may not see the impact of increased government spending on the economy until early next year.
Lastly, it will be key to monitor China’s relationships with the rest of the world. In March, U.S. goods imports from China were less than imports from the Euro Area, Mexico, and Canada, now only accounting for 11.5% of total U.S. goods imports, compared to 21% in 2018. Additionally, recent news showed that no matter the outcome of the U.S. election in November, trade tensions between the U.S. and China are likely to remain high.
Therefore, China may be attractive tactically, but the rest of Asia can offer investors exposure to long-term trends.
Thank you for listening. For more insights on China’s economy and markets as well as more information on other Asian economies and markets, please check out the Guide to Investing in Asia. You can find it on J.P. Morgan Asset Management’s website for institutional investors or on our mobile app, “Insights” by J.P. Morgan Asset Management.
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This content is intended for information only based on assumptions and current market conditions and are subject to change. No warranty of accuracy is given. This content does not contain sufficient information to support investment decisions. It is not to be construed as research, legal, regulatory, tax, accounting or investment advice. Investments involve risks. Investors should seek professional advice or make an independent evaluation before investing. The value of investments and the income from them may fluctuate including loss of capital. Past performance and yield are not indicative of current or future results. Forecasts and estimates may or may not come to pass. JPMorgan Asset Management is the asset management business of JPMorgan Chase & Co and its affiliates worldwide.