Global fund managers Abrdn and Fidelity International believe that a change in the policy of the National People’s Congress, which will be determined at a meeting of the Chinese Parliament in March, could stimulate a new rally in the Chinese stock market, writes Bloomberg.
Abrdn’s director of Asian equity investment, Elizabeth Quick, said she expects to see “more favorable policies in the form of consumer stimulus and soft real estate measures” in the coming months. However, she is not sure that at the moment “the recovery of the market is fully justified.”
March 4 and 5, 2023 in China will pass the annual meeting of the highest deliberative and legislative bodies of the PRC (or “two sessions”) – the session of the National People’s Congress (NPC, parliament) and the session of the National Committee of the People’s Political Consultative Council of the PRC. During the meeting, socio-economic achievements and prospects for further economic development of the country will be discussed, and a number of new projects will be approved.
“It will be another two weeks before we know the direction of the Chinese economy,” said Bunny Lam, head of research at Ceb International. interview Bloomberg. He also noted that before the meeting, investors would prefer to take profits first.
The Hang Seng China Enterprises Index rose nearly 50% from November to January as the country’s zero-tolerance policy began to be lifted, which led to a surge in consumption in the country. According to the agency, investors are looking for additional political support for further growth of the stock market. During last year’s meeting, Beijing took an aggressive stance and laid the groundwork for stronger fiscal stimulus.
Victoria Mio, head of equity research in the Asia-Pacific region of Fidelity, believes that the National People’s Congress will pursue policies aimed at economic growth, as well as providing a favorable environment for private business.
Between November 29 and December 7, 2022 Bloomberg News conducted a survey fund managers and strategists at large investment firms, which showed that some stock market participants are bullish on Chinese equities as the market crash in early 2022 sent stock valuations well below the 20-year average. They also noted that low valuations of companies make them more attractive than American or European papers.