KWEB - China's Bull Market Is A House Of Cards
2024-05-21 10:23:42 ET
Summary
- China's equity bull market looks increasingly like a house of cards built on empty promises and speculative hubris.
- Renewed interest in Chinese equities has driven up the prices of the iShares MSCI China ETF and the KraneShares CSI China Internet ETF in recent weeks.
- While an increasing number of analysts seem to believe that this bull market will be fuelled by a genuine recovery in China's macroeconomic fundamentals, we remain skeptical.
- The Chinese government's latest game plan to bankroll the purchase of unsold properties resembles a desperate attempt to resuscitate its ailing economy. Although the latest stimulus is much more decisive and impactful than the ones before, we suspect it will nonetheless prove to be too little too late.
- Are investors truly confident of the outlook for Chinese equities and, are therefore, investing in an asset class that should deliver strong returns in the coming years due to the deep discount relative to developed world equities? Or are these speculators and gamblers looking for that one big hit? We think it is the latter.
China's equity bull market looks increasingly like a house of cards built on empty promises and speculative hubris. Following extended delays and piecemeal efforts to stimulate the Chinese economy over the last two years, Beijing's latest game plan to buy up completed properties from real estate developers drowning in debt has reignited a rally in Chinese equities....
China's Bull Market Is A House Of Cards