“Overlooked green shoots” for China – improving growth seen ahead

In summary from analysts at Invesco Asia Trust on their outlook for China.

Say that factors leading to ingrained pessimism on the economy include:

• faltering demand in the property market
• weak consumer confidence
• a perception that the policy response to market weakness in late 2023 was underwhelming

But, the analysts say they are maintaining a slight overweight position in China and Hong Kong, citing:

• much of the negative investor sentiment comes from ignoring strong household savings and healthy balance sheets
• recent policy announcements point to a greater focus on boosting confidence and supporting growth
• if attitudes toward China improve, they will be rising from a low base, with heavily discounted equity valuations likely to respond quickly to signs of improving corporate fundamentals
• geopolitical tensions persist, but there are indications of economic stabilization and policy measures aimed at more determined efforts to support the property market

This article was written by Eamonn Sheridan at www.forexlive.com.