The latest batch of stimulus measures from the Chinese government appears to be having a more of an impact on the equity market than similar steps have had over the past year.
The MSCI China index has outperformed global equities by 7% since early February, and the domestic MSCI China A index has outperformed by 10% (price return in USD terms).
In addition to the steps taken to support economic growth, China’s national legislature just concluded its annual session, which many investors appear to believe augurs a better policy and growth environment in the months ahead.
Chinese equity market valuations have appeared cheap for a long time now, but these could finally be the steps that will reduce the discount to global equities and lead to a more positive dynamic.
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