China was the first to experience COVID-19 but it is the first to emerge from lockdown. What does the future hold for China’s economy, is there a recovery, and what themes should investors watch out for?
Key takeaways:
- China’s economy is recovering from COVID-19, but has yet to return to normal
- Indicators like traffic congestion and coal consumption have shown a meaningful improvement, but we are not yet at the full recovery stage
- COVID-19 has revealed a number of behavioural changes in China, such as the shift from offline to online, which present investment opportunities in sectors like after-school tutoring, financial services and healthcare
- Leading companies will benefit from ongoing consolidation in many industries as small firms struggle
- As world bond markets shifts to negative yields, China government bonds offer a unique value proposition to investors based on low correlation & volatility as well as attractive yields
- Despite concerns about data quality, we remain confident in the data being released by the Chinese government
