‘Signs of life’ in China’s markets as supportive measures boost confidence, forum told

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Investors’ pessimism about China may no longer be well placed, as policies to bolster confidence are likely to spell better times ahead, say financiers

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Robert Li, senior director and client portfolio manager of equities at Barings, and Steven Sun, head of research at HSBC Qianhai Securities, at the Post’s China Conference. Photo: May Tse

Jiaxing Li

Published: 3:59pm, 4 Jul 2024Updated: 5:38pm, 5 Jul 2024

Global investors’ pessimism about China may no longer be well placed, as policies designed to bolster confidence are likely to spell better times ahead for the market, senior financiers told a conference.

“Suffice to say the past few years have been the darkest period for China investors, [but] this story has started to change,” said Steven Sun, head of research at HSBC Qianhai Securities.

Regulators have been strengthening their efforts to lift the market’s performance in recent months. A record 400 billion yuan (US$55 billion) has flowed into exchange-traded funds (ETFs) tracking major indices this year as state-owned funds dubbed the “national team” went back into action, while a tightening of the rules governing initial public offerings (IPOs) have improved the liquidity situation, according to Sun.

Past market failures, including the recent slump in January this year, the US$5 trillion meltdown in 2015 and the global financial crisis in 2008, have all given Beijing the impetus to focus more on investor returns, Sun said.

“The whole purpose really is, you know, for the capital market to achieve its role of allocating capital relying on market-driven forces,” he said.

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One of the key criticisms from global investors is that the major stock indices are not acting as barometers of China’s economy because the market is diluted after excessive listings, said Robert Li, senior director and client portfolio manager of equities at Barings, a global investment company. That means long-term allocators are not willing to commit as much capital because they need to put in extra work to identify good investment targets.