StockTalk (5.10): Assessing China's Economy - Signs of Resurgence or Depression?

What is your name : yes look at Sassuer REIT

GodSpeed289 : Not a good time yet. China's economy is essentially supply driven rather than demand-driven, and it is really heavily dependent on real estate. The GDP numbers do not lie. Easing up of the Chinese Government’s regulatory crackdown in tech companies will be a key factor. As well as the “common prosperity” agenda. The rapid decline in the chinese property market could affect the economics of China as a whole. Hence, you’ll need to weigh those before making a decision to buy China stock.

doctorpot1 : investing in China right now do have quite substantial risk but it also bring about huge potential rewards. the US China tension, the potential new war, the sanctions and trade war. all these adds a lot of risk and uncertainty to the Chinese market, thus the price is still depressed despite showing good numbers. but that also means that we can get it cheaper and if the economy rebound, then huat liao

ZnWC : Reason to invest in China:
1. 2nd largest economy in term of GDP - too large to ignore
2. Economy recovering after travel restriction lifted
3. Many US companies invest directly or indirectly in China

Risk investing in China:
1.  US-China tension on Taiwan issue
2. Low inflation and growth is slowing, may experience stagflation
3. Population is shrinking and ageing - affect demand

Despite the risk, I'll keep some China stocks in my portfolio but not many like Warren Buffett. Diversification is the key in investing amid a recession fear.

bullrider_21 : The best time to buy China stocks was in Oct last year when rumours of it easing Covid-19 restrictions surfaced. The rumours turned out to be true when China reopened from its zero- Covid policy by lifting most restrictions in Dec. The MSCI China Index bottomed and surged because investors were expecting a strong rebound from the reopening. The $CSI 300 Index (000300.SH)$ rebounded 22% by Jan this year.

But the rebound turned out weaker than expected. Consumption and manufacturing were lower than expected. Tech stocks, the biggest gainers, fell back on fears of U.S. sanctions. U.S.- China tension is a risk to a market rally. The CSI 300 retraced 43% of its rise from its Oct 2022 bottom to its Jan 2023 peak.

But China has set a target of 5% GDP growth this year. If the growth is slower than expected, China would undertake stimulus measures.

The pullback may be a good time to buy. This 2 weeks, Chinese financial stocks continued on their 6- day winning streak, the longest in 4 months. Brokerage shares also surged as much as 4.1%, reaching its highest level in 11 months.

The latest gains in major state firms from banks to securities firms and telecom operators indicate that Beijing's pledge to widen funding access for them has offered investors a fresh reason to restart a stalled reopening rally. Several Chinese lenders' recent decisions to cut deposit rates also have boosted appetite for the banking sector.

When the market sentiment is still fragile and investors are relatively conservative in their moves, bank names are often favoured in China. Investors like their dividend yields and the call from the authorities to discover the value in central State- owned Enterprises (SOEs).