From the Bank of America Asia Fund Manager Survey (FMS), dour reading on the China outlook.
China: from unabashedly bullish to fatigued skepticism
- The January Asia FMS professed an unambiguously bullish outlook for China. However, uneven economic recovery and recurring market underperformance have sapped the euphoria in favour of a more balanced view, not only on the market but also on the economy now.
- Net 49% of investors expect a stronger economy over the next 12 months, down sharply from 79% in April, as waning policy easing expectations, despite disappointing economic data, cast doubts on the recovery narrative.
- Unsurprisingly, there is a noticeable lack of risk appetite in China with the FMS re-iterating its view that households will prioritize savings (cited by 40%) and consumption (31%) over investments (26%). While there are not many takers of an outright bearish view, as yet, on China equities, an aggravation of US-China relations or policy tightening could push 80% in the back foot. The long-term view is even more pessimistic, with six out of 10 investors sticking to a structural de-rating view for China equities.
