The move has shattered the narrative among China skeptics that political leaders had ushered in a repressive economic ice age. The flexibility demonstrated in the fourth quarter of 2022 has in our view set China up for growth in 2023, after three years of stagnation and uncertainty.
The road ahead remains challenging, with confidence in the property market still absent and the disruption caused by the country’s sudden Covid exit strategy making headlines. Nevertheless the pragmatism and comprehensive nature of the 2023 policy prescription has justified our confidence that the worst was indeed over for China by Q3 2022.
We are upgrading our outlook for China to constructive based on our five-factor model, with a confluence of macroeconomic pro-growth pivots such as expansionary fiscal policy, the potential for further monetary policy easing, China reopening, and comprehensive policy support for the property sector. With valuations in key sectors still at historical lows and investor sentiment recovering, we believe it’s an appropriate time to increase exposure to Chinese equities, through an active investment strategy.
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Market outlook
This is how we summarize the current outlook for investors in China based on our five-factor model.
Important information
This information is for informational purposes only and should not be construed as an offer to sell or an invitation to buy any securities or products, nor as investment advice or recommendation. The contents of this document have not been reviewed by the Monetary Authority of Singapore (“MAS”). Robeco Singapore Private Limited holds a capital markets services license for fund management issued by the MAS and is subject to certain clientele restrictions under such license. An investment will involve a high degree of risk, and you should consider carefully whether an investment is suitable for you.