Franklin Templeton Stephen Dover: China’s long-term prospects remain unchanged and global investors continue to add a-share listings

2022-05-15 0 By

As I look ahead to 2022, I reflect on the past two years, which have been characterized by chaos and opportunity.COVID-19 has upended not only financial markets, but also our daily lives and the way we interact with the world.The pandemic has brought about transformative change in a short period of time.Individuals, communities and institutions have proved far more resilient than we thought.This pandemic shows that chaos can create new opportunities, as well as new risks.Our view for The China market in 2022 is positive, especially for global investors, as China is likely to have largely completed the biggest regulatory policy reforms and has also started to loosen monetary policy, which is pro-growth.China’s current policies suggest it is preparing to stimulate growth, in stark contrast to the fiscal and monetary policy shifts in the United States, Western Europe and other emerging market countries.China’s stock market as a whole is attractively valued compared with other countries.China’s long-term prospects also remain unchanged as global investors continue to increase their allocation to A-shares.China is at the heart of globalization.Developed markets, though, may repatriate production.But globalization remains a powerful driver of greater economic efficiency and higher returns on invested capital.Currently, China is not well represented in global indices, but it is likely to get a higher weighting in global indices in the future.No matter what the market conditions are, stronger quality companies will emerge.We expect quality companies to grow throughout the market cycle.Although China’s economic momentum is slowing, well-run companies still have an opportunity to outperform their competitors, whether through market share gains, better cash flow and balance sheet management, or pricing power.We believe there will be growth opportunities for companies that can benefit from the tailwind of policy.China is promoting high-quality economic development, creating a better living environment, and promoting the development of renewable energy and electric vehicle industries.We believe China’s ELECTRIC vehicle industry has crossed a turning point, with consumers increasingly accepting electric vehicles as a primary means of transportation, indicating that the industry may not need more government support.China may find that fostering national champions in electric vehicles and renewable energy helps it continue to grow as a global industry leader.Several Chinese companies in the electric-car industry and solar power already dominate global market share.In 2022, however, we should not ignore some risks, such as the Challenges the Fed faces in balancing growth and inflation;Chinese regulation may put short-term pressure on some industries;The evolution of COVID-19 in China and other parts of the world;And with COVID-19 technology, the market adjusts accordingly, potentially bringing increased volatility.In the Chinese New Year, 2022 is the Year of the Tiger, a symbol of bravery, competition, prowess and adaptability.This is an important quality for investors looking for yield in 2022.We believe it is key to focus on the quality of listed companies, which is critical to achieving long-term benefits.This article is from Red Journal Finance