By tracing patterns across China’s past three Five-Year Plans, we reveal how policy cycles shape markets—and what investors should expect in the next five years.
This month’s China High-Frequency Indicator (HFI) Chartbook decodes the conflicting messages in recent economic data, highlights key signals from our HFI, and explains what they mean for China’s economy and markets.
The CNY/USD has room to appreciate both cyclically and structurally, while nominal yields on China’s long-duration government bonds are set to fall. This combination supports Chinese equities.
Our high-frequency indicators show China’s growth momentum weakening further in September, increasing the likelihood of new stimulus in the weeks ahead. We remain tactically cautious on Chinese equities, but strategically constructive on offshore Chinese shares.
We are turning more constructive on Chinese internet stocks after several years of caution. We recommend going long offshore internet equities in absolute terms and upgrading MSCI China to overweight in a global equity portfolio.
Chinese stock prices have significantly decoupled from the country’s business cycle, with the full impact of US tariffs yet to be realized. The valuation-driven equity gains without a cyclical economic recovery will be vulnerable to a reversal.