Looking back at 2021, Chinese equities faced headwinds including regulatory shifts, economic stresses, geopolitical tensions as well as Covid-related uncertainties. All of these led to a significant market correction.
After a tough start in 2022, there is some light at the end of the tunnel amid more fiscal
stimulus and a more accommodative monetary policy stance. A number of challenges remain. These should not be overlooked.
The biggest near-term risk to Chinese growth is its zero-Covid policy. This is offsetting the positive effects of Beijing’s cautious policy easing. Beijing is not likely to change its stringent Covid policy during this politically important year (20th Party Congress), in our view.
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