Invesco: The recovery of China-US trade and the better-than-expected GDP in the second quarter support the strength of the Chinese stock market, with continued upward momentum in the future
Invesco Asia-Pacific Global Market Strategist Zhao Yaoting pointed out that the Chinese stock market strengthened due to the warming of China-U.S. trade and the better-than-expected GDP in the second quarter, with the Shanghai Composite Index breaking through 3,600 points, reaching a new three-and-a-half-year high. It is expected that more stimulus measures will be introduced in the second half of the year, and a comprehensive trade agreement between China and the U.S. is likely to be reached, further driving the market upward. Artificial intelligence and new consumption are the market highlights, with the government supporting consumption transformation through subsidies and other measures. Although the expiration of tariffs on August 12 may trigger volatility, China-U.S. relations are tending to ease
According to the Zhitong Finance APP, the Chinese stock market has recently strengthened, with the Shanghai Composite Index surpassing 3,600 points, reaching a new high not seen in over three and a half years. Zhao Yaoting, a global market strategist at Invesco Asia Pacific, believes this is mainly due to the warming of Sino-U.S. trade relations and better-than-expected GDP data for the second quarter. The upward trend still has sustained momentum, with artificial intelligence remaining a highlight of the Chinese market.
Zhao pointed out that the better-than-expected GDP data has increased domestic investors' risk appetite, driving capital inflows into the stock market and enhancing confidence in the current policy mix, allowing for more room for targeted policy support. However, due to the front-loading of export orders, a return to normalcy is expected in the future, meaning that the continued rise of the stock market will rely more on the transformation of the consumption structure, especially the expansion of the service industry, experience-driven consumption, and innovations in the pharmaceutical and green technology sectors.
He stated that the upward trend of the Chinese stock market still has sustained momentum. Investor sentiment towards Chinese stocks continues to improve, and valuations remain attractive compared to global and regional peers. It is expected that more stimulus measures will be introduced in the second half of the year, and a comprehensive trade agreement between China and the U.S. is anticipated, providing further upward momentum for the market.
Zhao mentioned that artificial intelligence remains a highlight of the Chinese market. China has taken a different path, focusing more on the practical application of AI, promoting large-scale adoption, and developing user-oriented tools. A recent significant positive development is the shift in U.S. policy, allowing the export of AI chips like Nvidia's H20 to China.
He continued that new consumption is also a driving force in the Chinese market, with China's consumption narrative shifting from merely buying more goods to deeper experiences and emotional aspects. China has clearly stated its intention to become a super-sized consumer market, with the government supporting this transformation through subsidies and other incentive measures.
Regarding the Sino-U.S. trade game, Zhao noted that the tariff suspension deadline on August 12 is worth paying attention to, as it may bring market volatility. However, currently, the bilateral relationship between China and the U.S. appears to be easing, with rational voices likely to prevail
