Despite concerns surrounding China’s economic performance, some market thinkers remain optimistic about the country’s potential for innovation and growth. Billionaire investors like David Tepper and Michael Burry continue to keep their China bets, with Tepper maintaining Alibaba as his top holding and Burry increasing his position in the company. BCA Research has also upgraded Chinese onshore stocks to overweight, expecting them to outperform global equities. Veteran investor George Boubouras sees opportunity in emerging markets and has a positive outlook on Beijing, particularly on exporters to China.
However, Wall Street is not without its China bears. Goldman Sachs recently exited its long-term position on copper and cut its price forecast for 2025 due to softening Chinese demand. Bank of America has also reduced its growth forecast for China for the year to 4.8%. Despite these concerns, retail sales in Beijing have seen a growth of 2.7% in July, marking the 18th consecutive month of expansion. Similarly, China’s tourism industry has experienced a surge this summer, with around 872 million passenger trips recorded during the season, a 6.2% increase from the previous year.
Looking ahead, Beijing predicts a record number of air passenger trips for 2024, surpassing the figure seen in 2023. Key factors contributing to this growth include the Lunar New Year holidays, the Paris Olympic Games, and increased demand for flights between China and other countries such as Japan, South Korea, Singapore, and Europe. Eric Lin, head of Greater China Research at UBS, highlights that Chinese corporates have shown strong earnings this year, driving support for China stocks in the near term. UBS has a 10% upside to its MSCI China price target for the remainder of 2024.
Overall, despite ongoing challenges in China’s economy, there are pockets of positivity and resilience. While some investors remain cautious, others continue to have faith in China’s potential for growth and innovation. The country’s tourism industry has seen an uptick in activity, with record-breaking air passenger trips expected for the year. Retail sales in Beijing have also shown consistent growth, indicating consumer confidence and spending power. As the world closely watches developments in China, it is clear that the country continues to be a significant player in the global economy, with opportunities for investors who have a strategic approach and understanding of market dynamics.
