What pension fund managers are saying about Chinese stocks as another Fed rate hike looms, geopolitical risks mount

Name: Explainer: How did Xi Jinping rise to power in China?
Uploaded: 2022-10-13T23:30:10.000Z
Duration: 7 min 22 s
Description: Explainer: How did Xi Jinping rise to power in China?

Goldman Sachs, Manulife, Fidelity and Amundi share their views on the Chinese economy and stock markets in recent publications

Another rate hike by the Federal Reserve is almost assured after a hot inflation report overnight sank the S&P 500 to the lowest level in two years

Reading Time:3 minutes

Why you can trust SCMP

Stocks face another dark October as funds struggle to contain losses. Photo: Dreamstime/TNS

Jiaxing Li

Published: 7:30am, 14 Oct 2022

The Hang Seng Index has tumbled almost 30 per cent over the past nine-plus months to levels last seen in October 2011. More than US$1 trillion of wealth has been destroyed across the market – equivalent to the size of the Australian economy.

The city’s pension fund is facing a wretched end to the year, following a record loss in January-to-September, as global stocks suffered another leg down this week. A hot US inflation report overnight just about assured another jumbo rate increase by the Federal Reserve next month.

Analysts and money managers have paid the price over the past year for trying to catch a falling knife, as growth outlook, corporate earnings capacity and unmeasurable geopolitical risks overwhelmed markets. What are they saying about the coming weeks? It’s mostly not pretty, as so far October looks set to live up to its dreaded reputation for big crashes.

Goldman Sachs

“As the 20th Party Congress of the Chinese Communist Party kicks off on Sunday, we don’t expect it to mark a shift in China’s economic policies,” the investment bank said in a report on October 12.

“Instead, we expect China’s dynamic zero-Covid policy to remain in place until at least 2Q23 due to political and medical considerations.”

The Wall Street outfit does not envision the stressed property sector receiving much more support, given the focus on stamping out speculative purchases.

07:22

Explainer: How did Xi Jinping rise to power in China?

“China’s leadership will increasingly embrace a new economic development model that prioritises goals other than economic growth, so we think that China’s current growth challenges could persist well beyond this year and next,” it added.