China market bottoming out, could see a sizeable rally: Mark Matthews

Mark Matthews from Bank Julius Baer & Co believes the Chinese market might be at its lowest point, and the economy could now begin to improve. Matthews' prediction is based on the strong increase in activity during the Chinese New Year holiday this year compared to the last year.

China's annual Lunar New Year migration, the world's largest yearly human migration, has commenced, with Chinese media forecasting a record nine billion domestic trips over 40 days, peaking on February 10, 2024, as millions journey to their hometowns for family gatherings.

| Chinese Lunar New Year holiday rush: 9 billion trips expected in next 40 days

Matthews added that the significant development is that China appears to be reaching a low point, which began around January 22, 2024, when Prime Minister Li Qiang expressed the intention to stabilise the market. Since then, it has increased by approximately 6%. The Shanghai Composite Index has shed close to 12% over the past year to 2,866 points as of February 16.

“I sense that it's bottoming, and the next step could be quite a sizable rally,” Matthews told CNBC-TV18.

Another market veteran, and investor based in Hong Kong, Adrian Mowat, had earlier told CNBC-TV18 that he sees some value in China, especially where companies are giving money back to their shareholders. However, the economy is growing much slower than the US or India, resulting in expectations of low corporate earnings growth. So, the value does not justify the risks of investing there.

Also Read | China's consumer prices drop at the fastest pace since 2009

China's stock markets have hit five-year lows and left institutional and retail investors scrambling to cut their losses as China's struggling economy and a lack of forceful government stimulus measures take their toll on confidence.

Chinese markets have been roiled by near-constant turmoil since 2019, first by a trade spat with Washington, then by the collapse of indebted developer China Evergrande amid the crisis that has torn through the country's real estate market.

Economists also anticipate deflationary pressures in China to persist for at least another six months, primarily due to the ongoing turmoil in the real estate sector.

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