2023-04-03 

Faced with global financial market turmoil, China's A-shares have recently emerged from independent markets. Looking ahead to the second quarter, investors are refocusing on the pace of economic recovery, and surveyed investors almost unanimously believe that A-shares will outperform the global market.

According to Bloomberg's latest survey on the mainland Hong Kong stock market, out of 13 analysts and fund managers responding to this question, 12 believe that China's A-share market will perform better in the second quarter than other global markets, while only one believes that the US stock market will lead the world. The median forecast of 12 CSI 300 Index index points at the end of the second quarter was 4261 points, which was 5.2% higher than the latest closing price. A total of 21 responses were received for this survey.

According to Bloomberg, after the upsurge of reopening transactions dissipated, China's stock market, which lacked fresh benefits, showed weak performance in February and March. The CSI 300 Index Index rose 4.6% overall in the first quarter, slightly worse than the MSCI AC Global Index. However, with the collapse of Silicon Valley Bank, the full write down of Credit Suisse AT1 bonds and other U.S. banking crises causing global financial market turbulence, the diversified investment value of RMB assets has emerged. A share has attracted foreign capital inflows for most of the past three weeks, and the pace of China's economic recovery is also accelerating, supporting investors to continue to be optimistic about future market performance.

From both a fundamental and risk averse perspective, A-shares are expected to outperform the global market, "said Pan Yuezhong, Director of Zhuque Fund, in response to the questionnaire, On the one hand, due to China's economic cycle and overseas misalignment, the probability of being in an upward cycle is relatively high. On the other hand, A-shares have a lower sensitivity to financial risks compared to overseas markets, and there has been no liquidity pressure on financial institutions caused by the decline of interest rate sensitive assets.

Meng Lei, China equity strategy analyst of UBS Securities, pointed out earlier in the report on A-share outlook in the second quarter that under the benchmark scenario, it is expected that economic recovery and downstream profit margin improvement will drive the growth rate of earnings per share of the CSI 300 Index Index to rise to 15% in 2023, and the recovery of superimposed valuation is expected to bring considerable upward space to the market. The report states that multiple leading economic indicators in China continue to rebound, macroeconomic policies such as the central bank's reserve requirement reduction maintain a tone, the marginal improvement of public fund issuance, and further increase in support for the private economy are accumulating positive factors in the market.

In this survey, the most promising sectors for institutional professionals in the second quarter were consumption and technology. They believe that these industries can benefit from the upward cycle of the Chinese economy, with great potential for performance improvement, and are the main policy focus of the new Chinese government. The worst performing sectors may be real estate, raw materials and energy. As Chinese developers are still weak in financing capacity, the Russia-Ukraine conflict is expected to ease or bring down the prices of crude oil and other commodities.

Institutions are also bullish on Hong Kong stocks. The median forecast of the Hang Seng Index and the Hang Seng China Enterprises Index at the end of the second quarter is 21411.5 and 7200 respectively, with 5% and 3.3% upside space from the latest closing price. With Alibaba announcing its largest organizational change in history last week, the expectation of a spin off listing boosted investor sentiment, and JD.com also followed suit in announcing its spin off plan. The Hong Kong stock market quickly rebounded, with monthly gains in March even surpassing those of A-shares.

Daniel So, a strategic analyst of China Merchants Bank International, said: "The Hang Seng Index will continue to enjoy the revaluation of value. Although the recent western banking crisis has brought some risks and uncertainties to the global market, it has limited impact on the Chinese stock market. If the Federal Reserve's position turns to dove, it will further promote the Hong Kong market, especially the growth technology stocks."

Faced with global financial market turmoil, China's A-shares have recently emerged from independent markets. Looking ahead to the second quarter, investors are refocusing on the pace of economic recovery, and surveyed investors almost unanimously believe that A-shares will outperform the global market.

According to Bloomberg's latest survey on the mainland Hong Kong stock market, out of 13 analysts and fund managers responding to this question, 12 believe that China's A-share market will perform better in the second quarter than other global markets, while only one believes that the US stock market will lead the world. The median forecast of 12 CSI 300 Index index points at the end of the second quarter was 4261 points, which was 5.2% higher than the latest closing price. A total of 21 responses were received for this survey.

According to Bloomberg, after the upsurge of reopening transactions dissipated, China's stock market, which lacked fresh benefits, showed weak performance in February and March. The CSI 300 Index Index rose 4.6% overall in the first quarter, slightly worse than the MSCI AC Global Index. However, with the collapse of Silicon Valley Bank, the full write down of Credit Suisse AT1 bonds and other U.S. banking crises causing global financial market turbulence, the diversified investment value of RMB assets has emerged. A share has attracted foreign capital inflows for most of the past three weeks, and the pace of China's economic recovery is also accelerating, supporting investors to continue to be optimistic about future market performance.

From both a fundamental and risk averse perspective, A-shares are expected to outperform the global market, "said Pan Yuezhong, Director of Zhuque Fund, in response to the questionnaire, On the one hand, due to China's economic cycle and overseas misalignment, the probability of being in an upward cycle is relatively high. On the other hand, A-shares have a lower sensitivity to financial risks compared to overseas markets, and there has been no liquidity pressure on financial institutions caused by the decline of interest rate sensitive assets.

Meng Lei, China equity strategy analyst of UBS Securities, pointed out earlier in the report on A-share outlook in the second quarter that under the benchmark scenario, it is expected that economic recovery and downstream profit margin improvement will drive the growth rate of earnings per share of the CSI 300 Index Index to rise to 15% in 2023, and the recovery of superimposed valuation is expected to bring considerable upward space to the market. The report states that multiple leading economic indicators in China continue to rebound, macroeconomic policies such as the central bank's reserve requirement reduction maintain a tone, the marginal improvement of public fund issuance, and further increase in support for the private economy are accumulating positive factors in the market.

In this survey, the most promising sectors for institutional professionals in the second quarter were consumption and technology. They believe that these industries can benefit from the upward cycle of the Chinese economy, with great potential for performance improvement, and are the main policy focus of the new Chinese government. The worst performing sectors may be real estate, raw materials and energy. As Chinese developers are still weak in financing capacity, the Russia-Ukraine conflict is expected to ease or bring down the prices of crude oil and other commodities.

Institutions are also bullish on Hong Kong stocks. The median forecast of the Hang Seng Index and the Hang Seng China Enterprises Index at the end of the second quarter is 21411.5 and 7200 respectively, with 5% and 3.3% upside space from the latest closing price. With Alibaba announcing its largest organizational change in history last week, the expectation of a spin off listing boosted investor sentiment, and JD.com also followed suit in announcing its spin off plan. The Hong Kong stock market quickly rebounded, with monthly gains in March even surpassing those of A-shares.

Daniel So, a strategic analyst of China Merchants Bank International, said: "The Hang Seng Index will continue to enjoy the revaluation of value. Although the recent western banking crisis has brought some risks and uncertainties to the global market, it has limited impact on the Chinese stock market. If the Federal Reserve's position turns to dove, it will further promote the Hong Kong market, especially the growth technology stocks."