Alpine Macro Analysts Warn of Slow-Motion Implosion in Chinese Stocks - Is a Rebound Possible?
In a recent note, Alpine Macro analysts cautioned that Chinese stocks may not experience a sharp rebound in the near future. The investment research firm highlighted concerns over a sluggish growth outlook and limited policy support from Beijing, painting a grim picture of China's economy.
As China's economy grinds down gradually, with soft private spending and a lack of immediate action from policymakers, the stock market has struggled to gain momentum. Both the Shanghai and Shenzhen indexes have hit six-month lows, reflecting investor caution and foreign hesitancy towards Chinese assets.
Alpine Macro pointed out a concerning deterioration in money and credit figures, suggesting weak spending across the board. Despite attempts to address funding shortfalls through bond issuances, the government's efforts have fallen short. With an unattainable 5% GDP growth target for 2024, China seems to be heading towards a significant economic slowdown.
Drawing parallels to Japan's prolonged stagnation in the 1990s, Alpine Macro warned that China might be repeating the same mistakes. While the firm plans to maintain long positions in Chinese stocks, they emphasize the need for drastic government intervention to spark a sustained bull market.
In the midst of uncertainty, Alpine Macro believes that value stocks in China could outperform growth stocks, mirroring Japan's experience. However, they advise a defensive approach for Chinese portfolios to weather the storm.
In conclusion, investors should tread carefully in the Chinese market, keeping an eye on government interventions and economic indicators. While opportunities for growth may exist, the current landscape suggests a cautious approach is warranted to protect investments in the face of ongoing challenges.