For these reasons it is important to invest in Chinese stocks

The chief investment strategist at Kraneshares, Anthony Sassin, said that the process of easing monetary policy in China and reducing interest rates was expected, as a result of the weak growth and recovery of the economy, and then the current process of adjusting monetary policy takes place.

Chinese exports

He added that retail sales data in China was less than expected and recorded an increase of 18%, while it was expected by 21%, and Chinese exports in May also came below expectations, and inflation indicators for both producer and consumer prices were below expectations, but the two indicators showed a discrepancy in price growth between producers and consumers. for some industries.

He stated that consumer prices rose, while producer prices fell in some industries due to weak global growth, and the credit data issued from China yesterday was weaker than expected, which led to a 10 basis point interest rate cut.

Chinese economy

China's recovery has not been delayed, Sassen said, and in two years the economy has struggled with regulations or lockdowns affecting investor and consumer sentiment.

He stated that the Chinese economy is gradually recovering, and the first quarter of 2023 was better than its predecessor, and the indicators for the second quarter of this year appear better than the first quarter.

He pointed to a gradual improvement in the appetite of consumers, as the consumer returned to buying, but for commodities with simple prices, after he used to buy cars and real estate, so the consumer returned to travel more and buy clothes, and the wave of buying large commodities or the so-called “Big Size Tickets” has not yet begun, which we expect to recover during the period coming.

"The weakness of the Chinese industrial sector in relation to global growth, but China is no longer fully dependent on global growth," according to Sassen.

Chinese economy

He said, "If the consumer returns to the markets, and the real estate sector activates - which affects investor sentiment - then the wheel of the Chinese economy will move in its tracks, and the state is ready for stimulus."

He stated that China began stimulating the economy two years ago with infrastructure, and issuing bonds for local governments, but there was no stimulation for consumers, which raises the question why the Chinese government does not stimulate consumers by paying them directly, as is happening in America, so that the consumer can invest the amount he gets, and therefore the Chinese consumer returns to the market at a slower rate than consumers in America and Europe.

Long-term investment

He said that China, for Crunchers, is a long-term investment, and if you have in the investment portfolio American and European stocks and bonds, it must also have stocks from China, which is the second largest economy in the world, but the investor must know where to invest in China.

"If the investor has been staying in China in general for 10 years, the return achieved is less than investing in S&P 500 shares, but if he invests in clean technology or health care and these innovative sectors, the return achieved is better than the return on investment in S&P 500 shares." According to Sassen.

He said, "It is important to invest in China, but the most important thing is to know the sectors that can be invested in. The Internet economy or the digital economy" is one of the most valuable sectors because its evaluation is very low and exposure to it is not great, and the sectors supported by the state are such as clean technology, as it restored support for electric cars for a while. 4 years, and it was canceled at the beginning of the year, and it also supports solar energy, health care, and these sectors in China will benefit from the recovery of the economy, which will grow in the long term.