‘As Lunar New Year celebrations continue this week, it’s a fitting time to reassess the Chinese market. The Year of the Snake, symbolising wisdom, strategy and transformation, is a timely arrival given China faces deep economic challenges, including a property sector crisis, weak consumer sentiment, and deflationary risks.
While Beijing introduced stimulus measures last year such as monetary easing and a $1.4 trillion local debt relief package, we believe these have only provided short-term relief. Meanwhile, new U.S. tariffs on Chinese imports take effect today, adding to market volatility and escalating trade tensions. In response, China has announced retaliatory tariffs on U.S. imports, including oil, gas and farm equipment.
Given these structural and geopolitical headwinds, we maintain a cautious outlook and an underweight position in China. Instead, we favour indirect exposure through Korean and Taiwanese companies, which offer stronger corporate governance and a more stable macroeconomic and regulatory environment.
However, China remains the world’s second-largest economy, with 5% GDP growth in 2024, outpacing most developed markets. Amidst caution, we continue to seek high-quality investment opportunities that meet our quality criteria.’
Link: MCP Emerging Markets – The Year of the Snake – Transformation or Turmoil?