Keeping faith with China’s equity market: deep sell-off is poised for a turnaround

THERE is no shortage of headwinds facing China’s economy in 2022, ranging from regulatory crackdowns, a crisis in the property market, renewed outbreaks of Covid-19, and the potential for Western sanctions given its relationship with Russia.

Once a beacon of opportunity, the world’s second-largest economy now looks like a difficult bet, with some investors labelling China as “uninvestible” and giving up on the market altogether.

Yet, despite the obvious risks, we think the deep sell-off in Chinese stocks could finally be on the cusp of a turnaround, as the government rolls out more policy support measures, Covid lockdowns begin to ease, and signs of easing emerge in the year-long crackdown on China’s tech sector.