Investment Institute
Monthly Market Update

Monthly update on Asia & China Market: A modest, uneven recovery

  • 23 June 2022 (5 min read)

In this video, our Senior Emerging Asia Economist Aidan Yao shares his latest outlook on the Chinese economy, against the backdrop of uneven recovery.


Full transcript:

Aidan: Hello, welcome to our monthly video. My name is Aidan Yao. I’m the senior emerging Asia economist at AXA Investment Managers.

The latest economic data of China shows the worst of the COVID shock has passed, although the recovery so far has been modest and uneven, and still faces risks of setback.

May activity data beat market expectations across the board, and showed a notable improvement in sequential growth after April’s slump.

However, not all parts of the economy performed equally, meaning that the recovery was multi-speed.

What does an uneven recovery mean?

Similar to early 2020, we saw:

  • Supply recovering faster than demand
  • Goods production recovering faster than services production
  • Exports recovering faster than domestic activity
  • Investment recovering faster than consumption

Overall, it is clear that the removal of supply-chain and logistics bottlenecks – on the back of Beijing’s recalibration of COVID policies – has played a critical role in supporting the economic recovery.

What is our latest outlook on China growth?

Looking ahead, plenty of challenges remain. Given the nascency and fragility of this recovery, we think Beijing needs to keep its foot on the pedal to assist a full restoration of economic normality. Fiscal policy has already started to boost infrastructure investment, but broader supports are needed to repair confidence among COVID-hit businesses and households via tax/fee reduction and consumption supports.

The housing market has shown some tentative signs of stabilization lately as well, but ince again, a meaningful recovery will require more policy easing.

These easing of economic policies, together with a further fine-tuning of COVID policies, in our view, will help to pave the way for an economic recovery in the second half of year. Our updated projection now has full-year economic growth at 3.6%, which still, sits below the current consensus forecast at 4.5%.

Thank you very much and stay safe.

    Disclaimer

    This website is published by AXA Investment Managers Asia Limited (“AXA IM HK”), an entity licensed by the Securities and Futures Commission of Hong Kong (“SFC”), for general circulation and informational purposes only. It does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy, sell or enter into any transactions in respect of any investments, products or services, and should not be considered as solicitation or investment, legal, tax or any other advice, a recommendation for an investment strategy or a personalised recommendation to buy or sell securities under any applicable law or regulation. It has been prepared without taking into account the specific personal circumstances, investment objectives, financial situation, investment knowledge or particular needs of any particular person and may be subject to change at any time without notice. Offering may be made only on the basis of the information disclosed in the relevant offering documents. Please consult independent financial or other professional advisers if you are unsure about any information contained herein.

    Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee such opinions, estimates and forecasts made will come to pass. Actual results of operations and achievements may differ materially. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Information herein may be obtained from sources believed to be reliable. AXA IM HK has reasonable belief that such information is accurate, complete and up-to-date. To the maximum extent permitted by law, AXA IM HK, its affiliates, directors, officers or employees take no responsibility for the data provided by third party, including the accuracy of such data. This material does not contain sufficient information to support an investment decision. References to companies (if any) are for illustrative purposes only and should not be viewed as investment recommendations or solicitations.

    All investment involves risk, including the loss of capital. The value of investments and the income from them can fluctuate and that past performance is no guarantee of future returns, investors may not get back the amount originally invested. Investors should not make any investment decision based on this material alone. 

    Some of the services listed on this Website may not be available for offer to retail investors.

    This Website has not been reviewed by the SFC. © 2022 AXA Investment Managers. All rights reserved.