J.P.Morgan Remain Constructive, Flag Potential Drivers For Structural Performance

MNI (London) - J.P.Morgan write “some investors have asked us how the tactical Chinese equity investment case can turn more structural.”

• “Beyond short-term policy tweaks, we highlight four non-consensus areas to monitor:”
• “Secondary property prices after further corrections, may start to stabilize in 2H24. Volume/pricing/foreclosure data are key.”
• “Anti-corruption has lasted for over one decade. In the case of HK ICAC, after its initial crackdown (1974-1977), new rules and processes were implemented and amnesty for minor corruptions prior to 1977 was granted to allow the economy to flourish again.”
• “MXCN is at the early 1997 equivalent of Topix on our estimates, where financial market reforms unfolded and eventually led to around 80% upside in the Topix from Oct 1998 to Feb 2000 after bank recap.”
• “Hardly anyone seems hopeful of a calmer US-China relationship ahead but there are signs of re-engagement. US Treasury data show that China raised UST holdings by US$12.4bn in Nov 2023. The US-China financial work group met over January 18-19 and, on Thursday, local media reported China will further open up financial markets.”
• “We stay constructive on China equities in 2024 and expect sentiment may markedly improve post-CNY (post 4Q23 results and LNY consumption data).”