China, equities weak in the long run
Last Update: 25/12/2024
The new wave of economic stimulus churned out by the government and central bank has restored visibility to China’s stock market, but the numbers in the long run say that investing elsewhere has returned more.
The graph above shows the trend in the strength ratio between China equities (CS 300) and global equities (URHT) over the past 10 years. As can be seen, the indicator shows, after a sideways phase, a rather sharp downward trend starting from 2021 onward. This is a sign of underperformance compared to global equities for China’s main list, which is also confirmed by a below-average short- and long-term trend.
Also noticeable is the announcement effect of the new wave of monetary stimulus at the beginning of October: a surge that was immediately retracted and at the moment unable to signal a change in the power relations between China and global equities.
