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Why the Chinese economy and Chinese equities may surprise to the upside
Why the Chinese economy and Chinese equities may surprise to the upside
2023/8/3

以下翻譯結果由阿里雲機器翻譯引擎生成，僅供參考。 睿亞資產對內容的準確性或適當性不承擔任何責任，如與英文原文含義不同，以原文為準。

In a refreshing break from the consensus of gloom surrounding China, Cambridge Associates wrote recently that the Chinese economy was not stalling. Meanwhile IMF holds steady its China GDP growth forecasts in the World Economic Outlook Update report released last week, at 5.2% for 2023 and 4.5% for 2024. In this article, our Senior Advisor Say Boon Lim shares more about why China may surprise to the upside and the appeal of Chinese equities as a relative value play.

IMF holds steady its China GDP growth forecasts. The International Monetary Fund last week released its World Economic Outlook Update report. Despite the negative media about China’s economy in recent months, the IMF maintained its GDP forecasts for China for 2023 (5.2%) and 2024 (4.5%). And of the countries on the IMF’s growth forecast table, China is still the second fastest growing in both years, next only to India.

Ten years ago, The Financial Times wrote of the risk of China’s economy “dropping out of the sky” – instead it grew by more than the current GDP of Japan and Germany combined. The media has seen an extraordinary amount of negative commentary on the Chinese economy in recent months, with language so extreme it reminded us of some of the more dire predictions over the years. One which we remember vividly – because the language was so graphic – was a commentary in the Financial Times published almost exactly 10 years ago, on 3 July 2013, which quoted an American “forecaster” warning that the Chinese economy was like a “jumbo jet” that was at risk of “dropping out of the sky”.

Quoting the forecaster’s jumbo jet analogy, the column said: “In recent years, a couple of engines have not been working well, and the pilot is now loath to keep straining the remaining good engines. He is allowing the plane to slow down, but if it slows too much, it will fall below stall speed and drop out of the sky.”

Over those past ten years, China’s nominal GDP grew almost another US$10 trillion. That’s way more than the current GDP of Japan and Germany combined.

“Scope for the Chinese economy and Chinese equities to surprise to the upside,” says US fund manager Cambridge Associates. In a refreshing break from the consensus of gloom surrounding China, US asset manager Cambridge Associates wrote recently (in June) that the Chinese economy was not stalling.

“Following a stronger-than-expected first quarter, recent economic data has softened, disappointing investor expectations of a sharper recovery after last year’s COVID-19 lockdown, but the Chinese economy is not on the verge of relapsing into recession,” the Cambridge Associates note said.

“The trend of steady, not stalling, growth is also reflected in corporate earnings, which are still expected to grow 18.5% in 2023 and have seen some positive earnings revisions recently. 

“Our sense is that geopolitics continues to have an outsized impact on Chinese equities. 

“The combination of disappointing growth and worsening relations (with the US) has heavily weighed on market sentiment, sending equity valuations back to levels similar to those seen last year before China abandoned its zero-COVID policy, despite a much better economic outlook at present.

“As a result, there remains scope for the Chinese economy and Chinese equities to surprise to the upside, given all the pessimism despite an economic outlook that looks favorable compared to expectations of a mild recession in Europe and the United States. For investors willing to tolerate the volatility, we continue to recommend holding modest overweights to Chinese equities relative to global equities, as a relative value play,” it said.



  • 林哲文
    林哲文

    資深指導顧問

中國高質量增長重新開放後疫情時代

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  • 林哲文
    林哲文

    資深指導顧問

中國高質量增長重新開放後疫情時代

以下翻譯結果由阿里雲機器翻譯引擎生成，僅供參考。 睿亞資產對內容的準確性或適當性不承擔任何責任，如與英文原文含義不同，以原文為準。

In a refreshing break from the consensus of gloom surrounding China, Cambridge Associates wrote recently that the Chinese economy was not stalling. Meanwhile IMF holds steady its China GDP growth forecasts in the World Economic Outlook Update report released last week, at 5.2% for 2023 and 4.5% for 2024. In this article, our Senior Advisor Say Boon Lim shares more about why China may surprise to the upside and the appeal of Chinese equities as a relative value play.

IMF holds steady its China GDP growth forecasts. The International Monetary Fund last week released its World Economic Outlook Update report. Despite the negative media about China’s economy in recent months, the IMF maintained its GDP forecasts for China for 2023 (5.2%) and 2024 (4.5%). And of the countries on the IMF’s growth forecast table, China is still the second fastest growing in both years, next only to India.

Ten years ago, The Financial Times wrote of the risk of China’s economy “dropping out of the sky” – instead it grew by more than the current GDP of Japan and Germany combined. The media has seen an extraordinary amount of negative commentary on the Chinese economy in recent months, with language so extreme it reminded us of some of the more dire predictions over the years. One which we remember vividly – because the language was so graphic – was a commentary in the Financial Times published almost exactly 10 years ago, on 3 July 2013, which quoted an American “forecaster” warning that the Chinese economy was like a “jumbo jet” that was at risk of “dropping out of the sky”.

Quoting the forecaster’s jumbo jet analogy, the column said: “In recent years, a couple of engines have not been working well, and the pilot is now loath to keep straining the remaining good engines. He is allowing the plane to slow down, but if it slows too much, it will fall below stall speed and drop out of the sky.”

Over those past ten years, China’s nominal GDP grew almost another US$10 trillion. That’s way more than the current GDP of Japan and Germany combined.

“Scope for the Chinese economy and Chinese equities to surprise to the upside,” says US fund manager Cambridge Associates. In a refreshing break from the consensus of gloom surrounding China, US asset manager Cambridge Associates wrote recently (in June) that the Chinese economy was not stalling.

“Following a stronger-than-expected first quarter, recent economic data has softened, disappointing investor expectations of a sharper recovery after last year’s COVID-19 lockdown, but the Chinese economy is not on the verge of relapsing into recession,” the Cambridge Associates note said.

“The trend of steady, not stalling, growth is also reflected in corporate earnings, which are still expected to grow 18.5% in 2023 and have seen some positive earnings revisions recently. 

“Our sense is that geopolitics continues to have an outsized impact on Chinese equities. 

“The combination of disappointing growth and worsening relations (with the US) has heavily weighed on market sentiment, sending equity valuations back to levels similar to those seen last year before China abandoned its zero-COVID policy, despite a much better economic outlook at present.

“As a result, there remains scope for the Chinese economy and Chinese equities to surprise to the upside, given all the pessimism despite an economic outlook that looks favorable compared to expectations of a mild recession in Europe and the United States. For investors willing to tolerate the volatility, we continue to recommend holding modest overweights to Chinese equities relative to global equities, as a relative value play,” it said.



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