China poised to add to global growth momentum, financial giants say
Amid various headwinds around the world, China will gradually recover from its recent challenges and stand out to add to global growth momentum over the next three to six months, foreign-invested financial institutions say.
While the global market will price in a higher risk of recession before the potential relief of a soft landing, UBS Asset Management believes a positive impulse to growth will emerge in China, where improving public health outcomes should allow for the stimulus Beijing is pursuing to more visibly buoy economic activity.
The expected improvement in China's macroeconomic performance relative to the rest of the world is "an investable opportunity," said the asset manager in its new panorama mid-year outlook.
As central banks around the world are walking a fine line between controlling inflation and avoiding recession, China is on the opposite side of the economic cycle, said Standard Chartered bank in its latest global market outlook.
"Chinese policymakers have clearly signalled they are willing to offer a reasonable level of policy support, leading us to believe the economy will gradually recover from the challenges faced in first half," the bank noted.
Although stocks remain unattractive given the macro backdrop of high inflation, the wealth management team at Standard Chartered predicts Asia, excluding Japan, will continue to be a preferred region for global equities.
China, which makes up 40 percent of Asia ex-Japan equities, will be "the key driver" for the potential outperformance of the region's capital markets, said the bank.
The banking giant said it has upgraded both China offshore and onshore equities to Overweight within Asia, ex-Japan.
Credit Suisse advises investors to find silver linings amid the global uncertainties.
In its recent China Market Strategy outlook, the firm said it believes that China's equity market will continue to rebound, on the back of a recovering macroeconomy, easing regulation, fine-tuning COVID management and potentially more stimulus in the pipeline.
Chinese stocks have gradually regained momentum since end-April, outperforming other markets and investors have gradually returned to add China equities from previously underweight positions, according to its study.
"We have not seen an across-the-board strong rebound for sectors and expect an uneven recovery, led by autos and sportswear," said Credit Suisse, adding that white goods, catering and the Internet are likely to post moderate growth while online travel and tech hardware tend to make a gradual recovery.