Chinese stocks mired in ‘secular bear market’, says top Morgan Stanley strategist
- Pain is far from over as profitability faces structural declines, according to Jonathan Garner, who has a history of calling booms and busts
That call turned out to be close to the top of a mega market cycle. The world’s second-largest equity market peaked, then crashed in the following month and has been mired in a painful slump for three straight years since then. Total market capitalisation of China’s onshore stocks has declined by more than a third to US$8.4 trillion, smaller than the combined worth of the three biggest US companies: Nvidia, Microsoft and Apple.
Garner, the US investment bank’s chief Asia and emerging markets strategist, who has been covering the region for more than two decades, believes the pain is far from over.
“Hong Kong and China equities, onshore and offshore, may be in a secular bear market,” he said in an interview. “At least as far out as we can see it, this is not as attractive as other markets.”
“The reason why we’re in that bear market is really quite straightforward,” he said. “Underlying economic growth is quite weak, and corporate earnings growth, consequently, is weak, particularly for US dollar-based investors.”