China’s reopening to spur Asean growth, but may also draw equity investors north

THE economies of Hong Kong, Thailand, Singapore and Malaysia may benefit the most as China reopens its borders. But when it comes to equities, past Asean winners could underperform as they have become expensive relative to North Asia in 2023.

Morgan Stanley said China’s faster reopening will be an “additional pillar of domestic demand support in Asia, while also imparting the largest positive spillover effects to the rest of Asia”. 

Asia’s growth is expected to improve from a trough of 2.5 per cent in the first quarter of 2023 to 5.1 per in the second half of 2023. Morgan Stanley lifted its 2023 growth projection for China to 5.4 per cent, from 5 per cent. This compares with the market consensus of a 4.8 per cent growth for 2023 and around 3 per cent for 2022.