February 3, 2023

South Sudan News Agency

Complete English News World

High risk, high return – could this be the investment of the year?

It may take a long time to rise

The world’s stock markets have started the year in a particularly good mood, with leading stock indexes on track for their biggest gains so far in 2023. That’s especially true for the Asian region’s stock markets: Amid the rally since late October, the MSCI Asia Pacific index has risen nearly 24 percent, Since 1993, it has significantly outperformed the US benchmark index. It also outperformed its European peers and the MSCI World Index. The main driving force is definitely there China is reopening And a weakening dollar provided further guidance for investors seeking recession-proof markets.

The MSCI Asia index had its best start since 2012.

The stock market is up 7.2 percent so far in January, according to a Bank of America survey of fund managers. The rally will continue for months. China’s growth prospects are improving at a faster pace, which also greatly benefits the region’s economies, while corporate profit expectations are rising, in contrast to the downgrades seen in Europe and the United States.

According to Bank of America’s Asian Fund Manager Survey 95 percent of investors expect Asia Pacific stocks excluding Japan to rise over the next 12 months; And half of them expect a double-digit rally. Most fund managers

Shameless optimism about China

– They added to the survey.

A 180-degree turn in China

Since late October, the Chinese leadership has continued to stress the need to abandon the strict zero-covid approach. Economic reopening targeted activities, and parallel previously amazing regulated In the field of technology The governance in the party was also very loose.

The Economic reopening About

  • The first serious speculation regarding the relaxation (not abandonment) of the zero-covid policy began in early November. They became stronger Above, after that
  • The Ali Baba Current quarter Quick report Company management spoke optimistically about the lifting of epidemiological restrictions.
  • However, the real breakthrough came at the end of November Nationwide demonstrations For more than twenty years in the form of the biggest movement wave in the motherland launched in China, the Chinese people had had enough of the harsh measures and iron strictness.
  • Knowing this, China was faced with a stark choice: maintain and introduce more stringent measures to control the epidemic that was raging at the time, or relax restrictions and allow the virus to spread freely.

    China decided on the latter, and by doing so, the administration indicated that they were beginning to work towards reopening the road entirely.

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The With the technical department Following are the positive developments in recent months:

  • The US regulatory authorities Officials in early November, ahead of schedule, without any major hiccups Completion On-site inspection of Chinese companies.
  • Then in early January news broke that Chinese officials Approved The Ant group Expanded capital investment plan: The giant’s stock market listing plans were earlier scuttled due to regulatory concerns, but as part of the new plan, the group has managed to double its registered capital.
  • It was also a development around the ant colony Jack Ma He resigned About the company’s management rights – all this was especially well received by investors, for example, shares of Alibaba, founded by Ma, rallied after the announcement, increasing the chances of Ant Group going public in the future.
  • The latest catalyst can be found in none other than one of the biggest victims of regulatory tightening. At Didi Global We can see it A few days ago: The ride-sharing company announced that it could resume registering new users on its system after a cybersecurity review. Chinese regulators have previously accused TD of flouting data protection laws — and last June, the company was delisted from the New York Stock Exchange. Business continuity is a big deal because Didi, along with the Ant group, has been an example of a tough crackdown on the Chinese Internet industry in two years. Hence the decision to allow continuous operation of didti is supported by many

    It is seen as a “clear sign” that Beijing is prioritizing restarting the country’s economy after the coronavirus lockdowns.

Faith sticks

Given the above, it is not surprising Investors are increasingly winking eastward. More and more optimistic expressions can be heard from market players. In addition to recessionary concerns in developed countries, “Chinese officials support domestic development.

That made both Chinese and wider Asian assets more attractive to global investors

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– For example, said Gary Dugan, CEO of the Global CIO Office, a wealth management and financial advisory firm.

Therefore, in the Asian rally, China has increasingly attracted attention. The MSCI China index has risen nearly 50 percent since the end of October. Among the leading Chinese companies, the stock prices of companies listed on US stock exchanges are experiencing a surprising rise, with no claim to absolutes:

Confidence gradually “sticks” to other markets, too. For example, indices in the Philippines and Vietnam have already entered bull market territory this month, while Taiwan is also approaching the milestone.

The Amount of capital flow It also reflects a turnaround in eastern markets: Foreign investors bought $16.5 billion worth of Chinese stocks in January alone.

Considered the largest monthly capital inflow on record.

Additionally, $3.3 billion “actors“$4.5 billion by investors in South Korea and Taiwan.

There is also cause for concern

It is important to point out that it is not possible to list only the arguments in favor of Chinese and Eastern investments, on the other hand there are numerous concerns: Economic decline of developed countries For example, it could dampen Asia’s newfound confidence, particularly for export-oriented markets like South Korea. And when China’s economy fully recovers.”It is gaining momentum“, there is also a danger Inflationary pressures are intensifying in the world’s second largest economy. And this could result in a continued tightening approach by central banks.

And this is significant China’s reboot and economic recovery is not a far-fetched storyNowhere is this better demonstrated than in the country’s latest quarterly GDP figures: China’s GDP expanded by 2.9 percent. has decreased Last quarter last year compared to a 3.9 percent year-on-year increase in the third quarter. Based on data from the fourth quarter, according to calculations by the Bureau of Statistics

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China’s gross domestic product grew 3 percent last year, below the government’s forecast of 5.5 percent.

China’s economy grew by another 8.1 percent in 2021 (after recovering from the coronavirus pandemic).

Although the data was slightly higher than analysts’ expectations, However, the commentary highlights China’s slowdown, The Reuters Attracted attention, for example, that

Economic growth in 2022 plunged to one of the worst levels in half a century.

In addition, it is important to point out that this will take a long time Chinese consumers are starting to spend again, despite an unexpectedly quick reopening from a nationwide lockdown due to the coronavirus. About a month after the city of Guangzhou reopened the restaurant, a local cafe owner told CNBC saidAlthough revenues have been on the upswing since December, but They are only 50 percent of normal. He expects it will take at least three to four months for revenue to return to normal, and this may seem like a trend for other businesses like it. According to Derek Deng, a partner at Bain, one can only hope that consumption will reach the first quarter level by at least 2022. This was the pre-Shanghai lockdown.

Among the risks to China’s future growth, it ranks first Real Estate Market Pressures (or, less pronounced, resulting credit market tensions) are included. 2022 in real estate sector Investments decline by 10 percent per annum, It was the first decline since 1999, when such data became available. Property sales have fallen sharply since 1992, suggesting that government stimulus measures have had little impact so far. In recent weeks, authorities have introduced a number of measures aimed at homebuyers and property developers, which are hoped to improve financial conditions.

Adding to the challenges faced by the economy and government China’s population will shrink in 2022 for the first time since 1961. It marks a historic turning point and is expected to mark the beginning of a long period.

This year, India is expected to become the most populous country in the world.

Cover image: Shutterstock