China’s equity market rebound in February can be attributed to the government's stepped-up rescue efforts, including interest rate cuts, stricter regulations on short selling, expanded investment scope of the state funds through ETF purchases, and the appointment of a new chairman at the CSRC, the country's stock market regulator.
In January, the Chinese small-cap and micro-cap segments were hardest hit by the economic downturn, largely due to the lack of concrete policy responses to boost business and consumer confidence. Additionally, investor sentiment was further dampened by concerns over the US-China relationship, including the possibility of Donald Trump being re-elected and his comments on imposing more tariffs on Chinese imports.
In December, China's leadership, at the Central Economic Work Conference, stressed high-quality growth and affirmed support for fiscal policies but fell short of specifying targets. Regulatory concerns in the online gaming sector led to a market sell-off, prompting the government to swiftly adjust its stance by approving new game titles and easing industry anxieties. Technology stocks recovered some ground in the following trading days.
In November, Chinese equities experienced positive gains, albeit lagging behind global markets which saw robust rallies amid declining inflation and optimism for a soft US economic landing. Initial enthusiasm from the mid-November meeting between Presidents Biden and Xi waned as little real progress was made despite positive behind-the-scenes developments.
As China's economic trajectory remains uncertain, a combination of factors, including corporate buybacks, household savings trends, and government policies, will play a pivotal role in shaping the future of Chinese equities.
Chinese equities experienced modest losses in September with the MSCI China and MSCI China A Onshore indices down 2.7% and 1.8%. However, economic data suggested that recent stimulus measures are beginning to take effect with a rise in consumption and industrial activity.
Chinese equities declined in August due to various factors, including property sector challenges and a lack of significant policy action. Towards the end of the month, market sentiment improved as the government implemented measures to support the economy and capital markets. Recent macroeconomic data indicated signs of stabilisation in the Chinese economy, with positive CPI, PPI, retail sales, and industrial production trends. However, concerns persist regarding the property sector's impact on the overall economic outlook.
China's electric vehicle (EV) dominance has surged, propelling manufacturers like BYD and MG to international acclaim. Faisal Rafi, Head of Global Research, underscores China's rapid ascendancy across EV realms, spanning manufacturing, supply chain mastery, government backing, and worldwide market expansion. Within this article, he emphasises that Chinese firms have achieved battery production mastery, particularly in LFP technology, resulting in near-monopoly control. These companies reap benefits from an efficient industrial framework, cost-effective advantages, and a skilled workforce.
Chinese equities surged in late July after dovish signals from the Politburo meeting, surpassing expectations with MSCI China and MSCI China A Onshore indices gaining 10.9% and 5.7%. However, gains were lost in August due to a lack of policy actions and property market troubles caused by developer Country Garden's bond restructuring.
