China equities – higher demand, lower supply

China equities have continued their positive momentum over the last month

Below are our latest thoughts on China:

- China equities have continued their good run since Chinese New Year. Both onshore and offshore markets have notched up gains of more than 15% (USD) since early February.1
- The improved market performance is due to a number of factors.
- First, the decision in January to mobilise the “national team” through significant buying of onshore ETFs provided a major confidence boost.
- By signalling a floor to the market, this has encouraged the return of some local “animal spirits” as seen by a notable pick-up in market turnover. China A daily trading volume has been more than RMB 1 trillion (approx. USD 140 billion) in recent days.2
- The Q1 results season has also been reassuring with a number of high-profile “beats”. While top-line growth has generally been as muted as expected, tighter control of costs has fed through into improved bottom-line profitability.