China

Tensions in Australia’s relationship with China, along with our neighbour’s weak growth other headwinds, have Australians shying off investing in the world’s second largest economy. But given the countries’ deep connections, ignoring China is easier said than done.

India’s booming population has many considering whether and how to get exposure to its market, despite its year-to-date underperformance. While it may not be the next China, India’s growth prospects remain attractive, driven by multiple tailwinds, and investors now have more points of access, Mason Stevens says.

With China’s recent policy shift prioritising domestic businesses over foreign alternatives helping to drive growth, investors should look for companies and sectors set to benefit from policy tailwinds, according to Ninety One’s Charlie Dutton and Mendy Zhang.

Markets have moved sharply to reprice Chinese assets upwards after the world’s second-largest economy signalled its reopening. However, some doubt the sustainability of the current bull market, saying key ingredients for a lasting recovery are missing.

The market view is still too optimistic, according to the BlackRock Investment Institute, and investors aren’t truly considering the risk of a recession.

While the market is broadly underweight China, South African-based Foord Asset Management is confident that President Xi Jinping’s economic plan for the country will bear fruit over time.

The Chinese government’s announcement of less onerous isolation guidelines prompted markets to rally in anticipating of a move away from zero-COVID policies. While significant short-term challenges remain, market sources say renewed growth may be in sight, representing future opportunity.

An erosion of trust has changed the investor psyche to one that prefers companies which generate cash profits with a long term focus, according to Schroder’s’ Martin Conlon.

China is seeing an acceleration in growth forecasts which will filter through to higher demand for commodities, managers say.

Australian miners are set to reap the benefits of rising demand for lithium, with some analysts upgrading earnings for listed companies.