Year Of The Tiger – Wealth Managers' China Predictions

Shirin Aguiar

28 January 2022

, the world’s second-largest economy and slated by some to overtake the US and become the largest, has had its share of challenges over the past 12 months, some of them self-inflicted. It has a zero-tolerance policy response to COVID-19, its real estate sector is weighed by worries about debt – as in the Evergrande crisis – and Beijing has cracked down on sectors such as technology and education, among others. The central bank has eased monetary policy, and economists have noted that China is taking such a course at a time when the US is starting to move in the opposite direction.

This is the “Year of the Tiger,” and China is preparing to host the Olympic Winter Games – often a chance for countries to put forward their (hopefully) best face to the world. (For those who are curious, people born in the year of the tiger are, according to one internet search result, "vigorous and ambitious, daring and courageous, enthusiastic and generous, self-confident with a sense of justice and a commitment to help others for the greater good".)

China knows that the year ahead is challenging, not just because of the pandemic and its aftermath, but also because it is at odds with the West over the national security crackdown on Hong Kong in 2020, worries about Taiwan’s autonomy, treatment of ethnic groups in western China, and other matters. However, China has often defied the warnings of critics to post strong growth and many investment firms are beating a path to the country’s large and growing middle class.

Here are a variety of comments from wealth management figures:

“China’s CSI 300 index now has a forward price-to-earnings ratio of 14 times versus 18 times a year ago. That is a whole lot more net earnings for your renminbi,” Stuart Kirk, global head of research and responsible investments at HSBC Asset Management, said.