For China stocks, bad news is good news as weak economic data fuels stimulus bets
Market rally gets fresh legs as policymakers pivot towards growth after years of focusing on risk management
The gap between China’s slowing economy and its buoyant stock market shows little sign of narrowing as policy expectations, advances in technology, and easing geopolitical risks continue to brighten the outlook for the equity market, according to investors and analysts.
That logic gained fresh momentum in August when broad-based indicators pointed to a slowdown in growth, reinforcing bets on further policy support.
Beijing’s drive for technological self-reliance, and a meeting between Presidents Xi Jinping and Donald Trump at October’s Apec summit in Seoul, are also expected to give fresh legs to the rally.
Policymakers have pivoted towards growth in recent months, after years of focusing on risk management.
Initiatives such as a mega hydropower project in Tibet and efforts to cut excess capacity in the green energy sector in 2025 have underpinned what investors call the “reflation trade” – a willingness to look beyond weak property data and soft consumer demand.