We watched China’s credit growth, rail shipments, and electricity consumption have a record resurgence. Improving resilient economy, cheap valuations. We see continued upside for A-shares going forward. We choose China.
At the beginning of the COVID crisis, the Chinese economy came to a screeching halt. The government banned economic activity, businesses shut down, and consumption ground to a halt. Eventually, all countries, industries, and individuals were affected by the dramatic and sudden shift in the economic landscape. The global stock markets crashed as well. Certainly, the potential ‘buy low’ possibilities increased future upside for those that handled the virus more quickly and with less permanent structural damage. Our research indicated that not only would China lead a recovery out of the global recession, but that there was a robust runway for growth in the second largest economy in the world. One of the stigmas surrounding China, that has kept Western investors skeptical of equity investment within the country, has been the legitimacy of Chinese economic data. The communist government has every incentive to show strong economic data and growth to attract foreign direct investment and increase their ties to the capitalistic economies of the West; and history supports this assumption.
