Weak inflationary pressures result from depressed domestic demand. The zero covid policy continues to impose lockdowns of cities and entire regions that limit spending opportunities. But at the time of the health restrictions, household consumption was weakened by the economic developments in the middle empire. The housing crisis, unemployment and economic slowdown are worrying the Chinese.
Until now, weak domestic demand has been offset by strong external demand. But the latest foreign trade figures suggest a slowdown in international trade. In August, exports increased by only 7.1% annually, compared with increases of almost 20% in the previous three months.
With weak domestic demand and slowing global growth, the coming quarters are expected to be challenging for the Chinese economy. As a result, it will face many challenges to ensure its future development in the medium term. But we think that China has the means to overcome these obstacles. Therefore, in the long term, Chinese equities maintain their attractiveness.
We keep 10% of chinese equities as part of our portfolio.
*Correction (19/09/2022 - 12PM):
The chinese equities in our portfolio is currently 10% and not 5% as previously mentioned in this article.*