From Morningstar: 2024-04-24 07:18:00

The Chinese stock market has been underperforming global markets for over three years, but with China’s GDP growth at 5.3% in Q1 2024, signs of economic improvement emerge. However, experts warn of challenges such as construction crisis and deflation threats hindering a full recovery.

Despite initial positive economic indicators, concerns persist around Chinese economic fundamentals with challenges in various sectors leading to Chinese stocks trading at historically low valuations.

Investors are divided over whether China poses a contrarian opportunity or is a value trap due to demographic challenges, lack of consumer spending, and a deflating real estate sector. China’s open-ended equity funds have seen significant outflows, yet the country remains a major player in the global economy.

While some see China as “uninvestable,” others believe in the potential for a significant revaluation of Chinese stocks based on the improving company earnings and macroeconomic stability. Active management with a selective approach is increasingly seen as crucial for navigating the complexities of the Chinese market.



Read more at Morningstar: Time to Look at Chinese Stocks Again?