China’s markets have been snoozing for over a decade. 🐉💤
Onshore stocks are down nearly 3% in dollar terms over the past 15 years… Compare that to the S&P 500’s 450% gains over the same period. Even in sluggish old Europe, the Stoxx 600 managed to return 47%.
For investors, China’s been a real test of patience.
Over the years, Beijing’s rolled out quick-fix stimulus plans that act like shots of adrenaline, energizing stocks… then fizzling again. That’s made it hard to imagine a solid comeback.
Read more: #GamePlan: Oops, China did it again!
But analysts say Beijing’s recent policy shifts suggest it’s finally ready to get serious about reviving the economy… and markets. China unveiled a HUGE stimulus program in September, making multiple announcements including an initial plan to offer more than $100 billion in liquidity support to stock markets.
Manufacturing activity for November offered early signs that the economy was finally responding, Bank of America’s Asia economist Anna Zhou wrote in a note to clients. China’s now boasting two consecutive months of expansionary factory activity.
Markets seem unconvinced. Chinese stocks are still DED, but they’re trading at bargain valuations compared to their US and European peers. So, if the government really steps up, today’s prices could be a steal.
