Investing.com — After an impressive rally over the past two months, China’s stock market is still expected to rise further, analysts at Alpine Macro said in a note, as the economy continues to grow on the back of further stimulus from the Chinese government. He pointed out that the situation is improving.
China’s stock indexes have risen 16-18% from multi-year lows in February, rising in recent days as the government rolled out its most targeted measures yet to tackle the beleaguered property market. An increase was also seen.
Analysts at Alpine Macro said the recent stock price rally was due to the dissipation of negative expectations that weighed on the Chinese market until early 2024.
They said increased financial support from the Chinese government would help the economy meet the government’s annual gross domestic product (GDP) target of 5% this year.
Analysts said Chinese stocks were still trading at “very low multiples”, especially compared to emerging market stocks. This made the stock an attractive buy as the economic situation is expected to improve.
He also noted that overall participation in the Chinese market has increased, and that short positions in domestic stocks remain.
Easing lending conditions in the Chinese market suggests more liquidity could be channeled into equities.
Focus on China’s real estate sector
Analysts at Alpine Macro say the Chinese government’s “bazooka” announcement on expanding housing support signals a significant reorientation in the country’s stance on the real estate downturn, with the country’s “bazooka” announcement on expanding housing support marking a major reversal in the country’s stance on the real estate downturn, with the country seeking to prevent further downturn in the sector. He said it reflected his “whatever it takes” attitude.
The Chinese government has also recently been seen relaxing housing purchase regulations in several major cities and instructing state governments to start buying loose inventory from real estate developers.
The nearly four-year slump in the real estate market has put significant pressure on China’s economy, given that this sector accounts for about a quarter of overall economic growth.
Analysts at Alpine Macro don’t think Chinese real estate stocks will offer superior returns compared to other sectors, but say relief to the housing market will ease concerns about the broader economy. Ta.
“A U-turn on Beijing’s housing policy will help ease financial stress for developers and bring asset prices to the lower end, avoiding a negative surprise for Chinese stocks,” the analysts said in a note.
Analysts at Alpine Macro said major indexes remain preferred to drive the overall market rally.
