Liu, speaking with CNBC’s Sri Jegarajah at the JPMorgan Global China Summit, said that while he expected the recent surge in Chinese stocks, “While this will give us pause in the short term, we are confident that revenues will improve in 2024 compared to 2023.”
“Earnings drive stock prices. Investors will be interested to see earnings growth.”
China’s CSI 300 stock index hit an eight-month high on Monday and is up 4.97 percent this year to 3,601.48. Liu expects the index to reach 3,900 by the end of the year, and said the Chinese market remains “among the cheapest” in Asia-Pacific.
The country’s stock market has struggled in recent years. Mainland China’s CSI300 was Asia’s third worst-performing stock market, falling 11.38% last year, and it also recorded losses in 2022 and 2021.
Hong Kong’s Hang Seng Index is set to record a fourth consecutive year of declines in 2023, having fallen 14% last year.
Chinese authorities have tried to support domestic stocks through measures to increase market liquidity and issuing warnings against misconduct.
Liu was optimistic about market reform in China following the appointment of Wu Qingxin, chairman of the China Securities Regulatory Commission, to head the commission, saying the commission had introduced supply-side reforms.
Under Wu, the China Securities Regulatory Commission has enacted stricter rules on the listing and delisting of companies and issued warnings to companies with poor dividend policies.
The measure will make it easier for companies to be penalized for non-compliance or problems with their financial reporting.
Asked about China’s real estate industry, Liu said it was at a “tipping point” and that JPMorgan was “positive” about it.
Chinese authorities last week promised new support to help state-owned enterprises buy unsold apartments.
This includes providing 300 billion yuan ($42.25 billion) from the People’s Bank of China to financial institutions to lend to local state-owned enterprises (SOEs) to buy apartments that have already been built but not sold.
