China - A few picks for recovery
China’s had some false starts. So has Hong Kong. As soon as they started to lift the Covid Zero policies, there were plenty of funds and companies going long China and HK.
But, the re-opening was far from smooth and it took time for China to readjust. Add to that all the geopolitical tensions that’s been taking place between China and the US, and Russia. It’s a bit of a mess.
On the stock market side, we have the US deciding to sanction some Chinese companies, chip makers and we have China kicking out the big Four accounting firms.
Within China, we have policies where the Government doesn’t want to pump in direct stimulus to consumers and the property market still remains weak.
Finally, we have the companies themselves - particularly the internet companies that are starting price wars that will probably bring down their margins. Sentiment is also not helped by the disappearance of China Renaissance's CEO, increasing suspicion Beijing was set to increase its pressure in private markets again.
It’s a bit of a mess.
Having said all of that, we know that China is reopening and will eventually recover.