Investors Renew Interest in Chinese Markets Amid Government Stimulus Efforts

Global investors are poised to invest in China again, spurred by Beijing's efforts to rejuvenate its slowing economy and revitalize stock markets. Although a growth boom is not anticipated soon, Beijing's economic support pledges and policy moves have made Chinese equities more attractive despite ongoing challenges.

Global investors are gearing up to place their bets on China once more, driven by Beijing's initiatives to reverse the economic slowdown and reignite long-term interest in its stock markets. Despite the early stages and modest expectations of a growth boom, government efforts to lure more capital into equities and stimulate consumer spending have enhanced the attractiveness of still-low Chinese company valuations, said investors managing over $1.5 trillion in client funds.

'We're going to be very disciplined but, in aggregate, we feel there's more upside than downside,' said Gabriel Sacks, an emerging market portfolio manager at Abrdn, which oversees £506 billion ($677 billion) in assets. He noted that the group had cautiously invested in Chinese stocks last week and awaits further detailed policy plans from Beijing following recent optimistic economic support promises, which led to a significant stock market rally.

China's factory activity contracted for the fifth consecutive month, and the services sector saw sharp declines in September, fueling the urgency for Beijing to meet its 5% growth target for 2024. Institutional investors remained hesitant last week, while hedge funds propelled Chinese stocks upward amid a stimulus surge. Meanwhile, mutual funds saw a decline in China equity holdings to a decade-low 5.1% of portfolios by late August, according to Goldman Sachs strategist Scott Rubner.

(With inputs from agencies.)