From Dow Jones & Company: 2024-06-26 13:34:00

Chinese stocks are struggling as investors await further government intervention to boost the economy and the property market. All eyes are on upcoming policy meetings in July, including the Third Plenum. Despite recent small-scale initiatives, investors remain cautious amid ongoing economic challenges.

The iShares MSCI China ETF reflects investor sentiment, shedding half of its early year gains. Disappointment in government action, geopolitical tensions, and trade restrictions are dampening market confidence. Expectations for the upcoming July meetings are low, with few anticipating major stimulus or policy shifts to address economic woes.

Authorities are making incremental moves to stabilize the property market, but more substantial action is needed for sustainable market growth. Investors are seeking clearer economic direction and policies, particularly regarding corporate bankruptcy laws and nonperforming loans. Geopolitical tensions with the U.S. are escalating, adding to investor concerns about China’s economic outlook.

Amidst uncertainties, fund managers are cautious in their investments, favoring companies with strong earnings growth and shareholder returns. However, geopolitical risks are prompting a shift in investment focus towards cash-strapped sectors like sportswear and factory automation, while avoiding industries targeted by government policies.

Overall, market consolidation is expected, providing potential gains for investors despite ongoing policy disappointments. Investors are advised to stay informed and agile in navigating the evolving economic landscape.



Read more at Dow Jones & Company: Chinese Stocks Are in a Rut. How These Policy Meetings Could Change That.