China stock catalysts seen lacking as economic woes run deep while Goldman bets on a 19% rebound to end 3-year slump

China’s stock market suffers from a lack of positive drivers and Beijing’s support efforts are likely to keep falling flat: survey

Goldman sees a 19 per cent jump in the CSI 300 Index based on an about 10 per cent rise in corporate earnings, effective policy delivery

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A public screen displaying stock figures in Pudong’s Lujiazui Financial District in Shanghai on June 21, 2023. Photo: Bloomberg

Published: 3:00pm, 10 Jan 2024Updated: 3:28pm, 10 Jan 2024

China’s stock market suffers from a lack of positive drivers as the new year begins and Beijing’s support efforts are likely to keep falling flat amid persistent risks, according to analysts and money managers.

Geopolitical tensions, China deflation and a possible US recession are seen as the greatest threats, while potential positives include bargain hunting after the prolonged sell-off and an end to the foreign-investor exodus, based on an informal Bloomberg survey of 23 mostly mainland-based respondents.

The benchmark CSI 300 Index is trading near a five-year low as concerns about the Chinese economy fail to dissipate. Monetary policy easing, cash injections and government buying of stocks have done little to fuel a rebound as investors eye a host of problems including an ageing population and worries that the property market no longer offers growth.

Stock prices seen outside the Exchange Square in Central, Hong Kong on January 8, 2023. Photo: Li Jiaxing

“Measures to boost stocks are aimed at curing the symptoms, not the disease,” said Yu Yingbo, investment director at Shenzhen Qianhai United Fortune Fund Management Co. While opportunities outweigh risks at current market levels, “we hope that authorities may find the resolve to tackle underlying issues in the economy,” he added.

One potential tailwind cited by most of the respondents is a likely end to foreign avoidance of Chinese equities. After 2023 witnessed the smallest inflow since the stock connect programme with Hong Kong started in 2016, lower global interest rates and improving risk-reward are seen luring foreign investors back to onshore-listed shares.

“I don’t think there’s any offshore money to be sold any more, nearly everything has been sold,” Hayden Briscoe, Asia-Pacific head of multi-asset portfolio management at UBS Asset Management, said on the sidelines of the bank’s Greater China Conference in Shanghai. “China looks extremely cheap relative to the rest of Asia.”