Global investors are paying attention to the Chinese stock market
China is attracting the attention of global investors in a world where the economy is growing at an unprecedented rate, said Robert Penalosa, CEO of property management company Abrdn Thailand. According to him, 1.4 billion people live in China, and every year about 4.7 million people receive higher education. In addition, China's economy is now leading the way in agriculture and renewable energy.
.jpg)
Penalosa noted that China is investing over $1.4 trillion in new technologies, especially artificial intelligence. He believes that China's Type A stock market offers a host of opportunities that could spark a lifelong change in global investment.
The Chinese Type A share market consists of companies listed on the Shanghai and Shenzhen stock exchanges. Ninety percent of the participants in this market are retail investors, while only 10% are foreigners.
.jpg)
The A-share market is traded in Chinese Yuan and is distinct from its "B-share" counterpart, which uses foreign currencies and is open to a wide range of foreign investors.
Penalosa also recommended that investors take a proactive stance in Chinese investment rather than relying on regulatory returns. He recommends applying the principles of EESG (environmental, social and corporate responsibility) and sustainability when choosing stocks.
Chinese economic recovery
Associate Professor Aksornsri Fanishsarn, an expert on Chinese economics at Thammasat University's Department of Economics, said China's economy has come out of the crisis but is still in recovery mode and could take time to get back to 100%.
She also gave reasons to be confident in the management of the economy by the Chinese government. Among them, she noted that China's economy will be developed by the progressive and nationalist new generation, known as "Generation Xi."
"At the moment, the Chinese government is taking every step in its monetary policy to encourage the Chinese to spend money and support the economy," she said.
China is also focusing on a data-driven economy and domestic production rather than imports to reduce dependence on foreign countries, she added.
However, she also warned that geopolitical issues were putting pressure on China's economy, notably citing the US-China trade war and tensions over Taiwan independence.
Expected growth of the Chinese economy based on three factors
Nicholas Yeoh, Abrdn's China equity group leader, said the Chinese stock market expects positive sentiment from three factors: the economic cycle, investment in innovation and cheap stock prices.
He explained that the economic cycle allows the Chinese government to stimulate the economy by easing monetary policy while controlling inflation. He noted that Chinese stock prices have declined recently, but the economy is now in the recovery phase after the cancellation of the "zero-Covid" policy.
In his opinion, investors are now shifting their attention from fundamentals to trends, as they believe that the global economy will recover in the second half of this year. For example, AI firms are expected to grow better than solar panel companies, he said.
He added that the Chinese government is making long-term investments in innovation, technology, renewable energy and EESG-oriented businesses to become more self-sufficient. "Mainly because of geopolitics, China needs to accelerate its self-sufficiency in technology, healthcare and domestic consumption," he said.
Yeoh compared the Chinese economy to a "Whac-A-Mole" game, explaining that as people invest in one or two trends, new trends emerge as investor confidence recovers.
Author of the article: Ekaterina Antonova
