China’s stock market recovery is sputtering, and according to KraneShares Chief Investment Officer Brendan Ahern, it might stay that way unless Beijing steps in with stronger fiscal support.
Despite high hopes for a post-COVID rebound, the Shanghai Composite and Shenzhen Composite are both in the red for 2024.
Ahern, whose firm oversees the KraneShares CSI China Internet ETF (KWEB), believes the government needs to act decisively to ignite the market.
Investors, especially those in mainland China, are looking for much stronger fiscal support from the government, Ahern noted on “ETF Edge” this week. “So far, we’ve been left waiting.”
The reluctance of Chinese households to return to pre-pandemic spending habits is dragging down consumer confidence.
June’s retail sales report, issued by the National Bureau of Statistics, showed a slight dip, further signaling cautious consumer behavior.
“That scar tissue, as well as a real estate crisis in China, has weighed on the balance sheet of the household,” Ahern explained.
PDD Holdings, the parent company of Temu, saw its stock nosedive post-earnings, a move Ahern attributes to a broader consumer spending slump and fierce competition in e-commerce.
The company’s intense focus on growth amid a tightening market has, in Ahern’s words, turned into a “bit of a crowded long,” leading to significant losses.
Ahern emphasized that for China’s tech sector to rebound, a robust top-down economic recovery is essential.
“I think you need to see policy amplification, and then you’ll see investors come back into this space,” he concluded.
China’s market narrative is now one of waiting—waiting for Beijing to unleash the stimulus that could revive investor confidence and spark the growth the country’s business sector desperately needs.
Until then, the market remains in limbo, reflecting the cautious optimism that has taken hold across the board.
You May Also Like:
