20-01-2023 · Yearly outlook

Constructive outlook for Chinese equities in 2023

China’s dramatic policy pivot in late-2022, embracing a pro-growth agenda and abandoning zero-Covid, has set up its battered equity markets for a sustained revival.


  • Jie Lu - Head of Investments China

    Jie Lu

    Head of Investments China

  • Helen Keung - Client Portfolio Manager

    Helen Keung

    Client Portfolio Manager

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.