Investors hope China markets hop in second half of Year of the Rabbit

The promise of more policy stimulus, under-representation in investor portfolios and potential earnings upgrades are piquing investors' interest in Chinese markets despite a weaker-than-expected recovery after the country's re-opening from COVID-19, reports Reuters.
Chinese equities have lagged markets in the US, Japan and Germany this year. Investors now expect China markets to stage a recovery in the second half of 2023.
"(China) markets have baked in a lot of the doom and gloom in the economy given the declines since January's peak," said macroeconomist Aidan Yao.
Since stocks are still cheap relative to history and peers, a re-rating is unsurprising, Yao told the Reuters Global Markets Forum (GMF).
"Supportive catalysts are falling into place, engendering an attractive tactical market setup for stock operators to take risk," Goldman Sachs strategists wrote in a note to clients.
Official data points were soft in May, but high-frequency indicators suggest growth momentum is stabilising, they added.
Chinese authorities know it is time to act and have ample room for monetary and fiscal package stimulus, said Charles-Henry Monchau, CIO of Syz Group, which manages $25 billion in assets.
"The market wants to see a new support package coming. If it is the case, spreads will start to tighten across the board," said Monchau, adding that China is under-represented in portfolios.