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JPMorgan on China Economy: Investors Are Seeking More Aggressive Policy Support

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Bloomberg Aug 15 03:55 · 28.6k Views

Tai Hui, Asia Pacific chief market strategist at JPMorgan Asset Management, shares his take on the latest economic figures out of China, and the implications for financial markets. Data from the National Bureau of Statistics show that the economy failed to pick up after its worst stretch in five quarters. Hui speaks on "Bloomberg: The China Show."

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  • 00:00 It seems like the macro narrative continues to dominate this Chinese market too, in some ways too.
  • 00:04 Absolutely.
  • 00:05 I think if you look at some of the recent company results, which I think you know, a lot of tech companies have improved on their operational leverage,
  • 00:12 delivering decent earnings performance.
  • 00:14 But at the same time you've looked at the market reaction to these companies have not been as strong as you would expect.
  • 00:20 I think still the macro narrative is dominating investor sentiment
  • 00:25 even though at the corporate fundamental level things are starting to improve.
  • 00:29 So
  • 00:29 I think couple of things,
  • 00:30 you know, I think investors still looking for more aggressive policy support to the economy, which we're still not getting.
  • 00:38 And secondly, of course, as we run up to the US presidential elections
  • 00:41 in, you know, less than three months time,
  • 00:43 how does US China relations evolve?
  • 00:45 I think that continue we'll be dominating investor sentiment at least for the near term.
  • 00:50 See,
  • 00:51 I mean just looking ahead to
  • 00:52 the next few months, right.
  • 00:53 So you mentioned the US elections, it doesn't look like on the data front things are going to
  • 00:57 make a substantial turn to the upside.
  • 01:00 Do you do you project that the
  • 01:02 the opportunities that have done very well in China, the trade that have done very well
  • 01:06 dividends banks would have you will remain the dominant themes moving forward.
  • 01:11 In other words, just the rest of the market
  • 01:12 remain hostage if you will by the next few months.
  • 01:15 I think for the time being, yes, because ultimately you don't have a significant international participation in the Chinese market at this point in time.
  • 01:22 So that retail markets in China or retail investors in China continue to dominate the scenes and what do they need?
  • 01:28 They need income,
  • 01:29 they need
  • 01:30 less volatile
  • 01:32 stock price movement, which
  • 01:34 a lot of these ten companies, banks, telecommunications energy
  • 01:38 tends to provide.
  • 01:38 So
  • 01:39 if you look at the
  • 01:41 stock level, at the index level is not particularly exciting.
  • 01:45 But if you look at some of the
  • 01:46 stoning companies, for example, the BIG4 stoning banks, they've delivered 25% plus return year to date.
  • 01:52 So there are opportunities in China, I think at least for the time being until we get better macro data that might continue.