Investors appear to be embracing the ideas that the dollar will weaken this year and that the Federal Reserve will slow its pace of interest rate hikes or that no rate increases at all will be delivered in 2019. China’s efforts to stimulate its massive economy also make the case for considering the country’s equity markets.
“Chinese policymakers have rolled out a number of monetary, regulatory, and easing measures to help support growth and mitigate the negative sentiment that has resulted from the trade tensions and growth slowdown,” according to BlackRock. “Recently, China announced 1.3 trillion yuan ($193 billion) worth of new measures including tax cuts for small businesses and reduced tariffs. Other policy implementations such as greater financial market openness, private sector support and infrastructure spending could further support economic growth and boost Chinese equities.”
Data suggest Chinese stocks are also inexpensive.
“Chinese equities have cheapened significantly to a forward PE ratio of 10.6 from the 2018 high of 14.8,” said BlackRock.
For more information on the Chinese markets, visit our China category.
