Chinese equities

It is easy to be positive on China’s economy, its policies, and the near-term outlook of its equities. I think China has been impressive in its control of the Virus and in formulating its economic policies.

  1. Chinese macro data continue to improve: Manufacturing PMI was 50.9, though this came mainly from the large enterprises, Caixin services PMI was strong at 58.4, industrial profits rebounded by 6% (yoy) in June. There could also be a ‘square-root’ trajectory in China with the pace of recovery flattening out a bit in the next quarters. But so far so good.
  1. China has consciously refrained from adopting ZIRP or QE. Mr Guo Shuqing – one of the reform czars – has criticised the West for not leaving enough room for further easing in the future, describing liquidity binges as a ‘last supper.’ His comments reflect Beijing’s aversion to ‘flood like’ stimulus. Keeping interest rate high is a way for China to ‘re-load’ in case they need the firepower later.
  1. Very encouragingly, China has not abandoned its financial reforms. The capital markets continue to be liberalised and I find the political commitment to reforms quite impressive, given the trying circumstances. The PBOC has been developing a digital RMB currency and the government continues to support the development of its tech sector. China is like the student who keeps working hard through the summer vacation, while other kids are having fun playing. Chinese equities have exhibited several mini-boom-bust cycles, and it seems that we will see Chinese equities continue to trade higher in the coming months.

The above article is an extract from our research paper “My Thoughts on Currencies” published on July 13, 2020. Source: Eurizon SLJ Capital Ltd. & Refinitiv Datastream.

Further information on our research commentaries and a trial of this service can be obtained by emailing


None of the contents of this document should be understood as constituting research on investment matters, or as a recommendations, advice or suggestions, implicit or explicit, with respect to an investment strategy involving the financial instruments discussed, or the issuers of the financial instruments, nor as a solicitation or offer, nor as consulting on investment matters, of a legal, fiscal, or other nature. All the companies of the Intesa Sanpaolo Group, its administrators, representatives, or employees, decline any responsibility (fault-based or otherwise) deriving from indirect damages potentially caused by the use of this communication or its contents, or in any case deriving in relation to this document, nor may they be consequently held liable for any of the above. The information provided and the opinions contained in this document are based on sources considered reliable and in good faith. However no declaration or guarantee is offered by Eurizon SLJ Capital Limited, explicitly or implicitly, on the accuracy, exhaustiveness and correctness of the information, and there is no guarantee that results, or any other future events, will be compatible with the opinions, forecasts, or estimates contained herein.

Views accurate as at the time of publication. Opinions expressed by the authors are their own and do not necessarily reflect those of Eurizon SLJ Capital Limited, Eurizon Capital SGR or the Intesa Sanpaolo Group.
The value of investments will fluctuate, which will cause prices to fall as well as rise and you may not get back the original amount you invested. Past performance is not a guide to future performance.


Our Research

Our written research products aim to provide unique and orthogonal insights on key global economic and policy issues in a timely fashion.

Aerial view of forest during  colourful autumn season.