The strong resilience of the Chinese market forces

2022-05-21 0 By

Recently, the focus has been on inflation concerns, policy tightening and a shift in investment style, but Catherine Yeung, chief investment officer at Fidelity International, sees three factors underpinning the appeal of The Chinese market for investors: looser monetary policy space, mild regulation and an attractive price-earnings ratio.Specifically, Catherine Yang analyzed that, on the one hand, the current direction of European and American monetary policies is quite different from That of China.China is clearly at a different stage of the economic cycle than Europe and the US, and monetary policy is looser, which history has shown tends to be good for markets.Especially at the beginning of the COVID – 19 outbreak, China did not like the west loose monetary policy to deal with, it makes the People’s Bank of China in the face of slowing economic growth in 2021 has more space launch economic stimulus measures, such as the People’s Bank of China recently for the first time since April 2020 mid cut its lending facilities (MLF) operation rate.On the other hand, while sentiment softened last year, Fidelity believes there are still attractive long-term investment opportunities in China.That’s because while it’s still the height of regulatory activity in China, particularly in the tech sector, Fidelity expects this year to be softer than the previous two years.It is also important to note that many countries around the world have recently introduced reforms to address challenges such as antitrust, data security and privacy security arising from technology giants and related industries, as well as the global problem of income inequality, Yang said.Faced with these problems, governments may act, but not as quickly as China.What’s more, Young says fidelity sees a clear positive for investors in China based on current valuations.”As China’s middle class continues to expand, we continue to favor companies focused on growing Chinese domestic consumer demand.In addition to consumer stocks benefiting from this trend, there are healthcare and technology sectors related to domestic demand themes.”According to Young, there will always be volatility in the market, but that often also presents attractive opportunities.”We expect corporate earnings growth in China to exceed 15 per cent over the next 12 months.”Price-to-earnings ratios in China are attractive both relative to their historical averages and compared to the rest of the world.”(Article source: International Business Daily)