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
