Man Group, Abrdn Count on China Stimulus to Revive Bull Run
(Bloomberg) -- Donald Trump’s return has cast a pall over China’s $10 trillion stock market, but for some money managers, the party isn’t yet over.
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Man Group and abrdn Plc are among those remaining bullish, counting on Beijing to deliver greater stimulus to offset the US president-elect’s tariff threats. The policy focus for 2025 will likely be on boosting consumption, they say, opening up pockets of investment opportunities even as the specter of a trade war pressures export-reliant firms.
The euphoria that followed China’s monetary stimulus barrage in late September has now given way to caution. Yet investors sense a clear policy pivot by President Xi Jinping toward stabilizing the economy after a multi-year deleveraging campaign, a shift that bodes well for stocks. Despite a recent slide, the CSI 300 Index has risen more tha 12% this year, heading for its first annual gain since 2020.
“China policymakers may want more visibility before deciding on the size and timing of fiscal stimulus measures, given the US election result,” said Andrew Swan, head of Asia ex-Japan equities at Man Group. “However, we think the direction of travel is clear, and the continued structural reform in China supports our optimism.”
2017 Versus 2025
It’s been another tumultuous year for stocks. The CSI 300 languished at a five-year low before the People’s Bank of China’s stimulus package came to the rescue. The onshore benchmark surged more than 30% in just six sessions through a Oct. 8 peak. In Hong Kong, the Hang Seng China Enterprises Index rose 39% in less than a month.
But since then, a mismatch has emerged between traders clamoring for bigger fiscal spending and the authorities wanting to preserve policy firepower. That discrepancy, along with Trump’s election victory and his nomination of China hawks for cabinet roles, has pushed stocks lower.
Bulls aren’t giving up. They are taking comfort from the fact that China is in a better position to weather a potential trade war than it was in 2017, thanks to a diversification of export channels. There are also doubts as to whether Trump will push forward with the 60% tariff threat on Chinese goods that may drive US inflation higher.