According to Zhito Finance APP, on November 19, Ma Lei, Chief Investment Officer for invesco in mainland china and Hong Kong, released the 2025 investment outlook for Chinese stocks. He pointed out that from a valuation perspective, Chinese stocks appear attractive, being relatively low compared to historical averages and other developed markets. In October, the msci chinese index was trading at about a 52% discount to the msci usa index. Given the current low market expectations, invesco believes there is significant growth potential for 2025, and is bullish on the development of Chinese stocks over the next 12 months. With improvements in corporate fundamentals, invesco expects revenue to reverse, and the profit margin pressure that has existed for the past three years to ease. This is expected to drive an increase in roi and upward revisions in earnings forecasts, thereby enhancing investor confidence. The current recovery expectations will be supported by ongoing stimulus measures.

Enhancing investor confidence in the growth of the domestic economy in china.

China has a large domestic market, and in recent years, the national savings rate has reached record highs. According to estimates from the International Monetary Fund, the total national savings in China in March 2024 will account for over 40% of the national GDP. The policy measures announced in September aim to restore consumer confidence, which is crucial for boosting sluggish consumer spending. Invesco believes that these measures aimed at enhancing the stock market, real estate market, and overall economic growth will ultimately boost investor confidence, consumer confidence, and job security in China. Considering recent policy support, invesco believes that domestic demand will recover in 2025. This will improve consumption and investment, creating a more resilient economic environment and ensuring stable growth in the future. It is worth noting that the timing, scope, and adequacy of implementing the latest policies will affect the pace of economic recovery, as the impacts of policies typically take time to permeate the real economy.

Chinese companies are expanding overseas.

Many top Chinese companies are aggressively expanding overseas. These companies possess cost advantages due to their economies of scale in the domestic market. Invesco identified this trend several years ago, and more overseas activities and expansions are expected in 2025. Invesco believes that Chinese enterprises will have increasing opportunities to participate in the development of new global supply chains. This trend will be particularly evident among companies in the fields of e-commerce, online games, large household appliances, and industrial sectors. These companies can leverage ongoing local demand while capturing larger shares of the global market, ultimately benefiting shareholders.

Chinese companies are focusing on increasing shareholder returns.

Invesco expects another key trend for 2025 to be that Chinese companies will focus on enhancing shareholder returns through active share buybacks and improving corporate governance. This trend may not only increase minority interests but also signify a commitment to returning value to shareholders. The market anticipates a strong rebound in dividends per share for Chinese stocks, with an expected growth of 16% in 2024 and increases of 6% and 8% in 2025 and 2026, respectively. This recovery will be widespread, with over 35% of companies expected to declare higher dividends in 2024. Companies with stronger cash flows are more likely to achieve dividend growth and execute share buybacks. Invesco believes that as these practices become more common, investor confidence will be strengthened, and the Chinese stock market will attract more investment.