To The Moon

Chio "bull" (bu) analyzing stocks

Firstly HAPPY CNY to all Tiger Readers! Hope you had a great lunar holiday the past few days!

The Chio “Bull” (chio bu) is back in Hong Kong! Over the past few days, the rally in the China/HK market has been unstoppable. Global investment funds have been flowing back into Hong Kong stocks as a number of policy changes have improved the outlook for China's economic growth. The Chinese economy is also showing signs of improvement and looks promising in a global environment of slower growth in 2023, leading to renewed optimism for China concept stocks.

China began dismantling its controls to prevent the spread of mild and asymptomatic Covid infections on November 11th. In the following weeks, mandatory restrictions on internal mobility were largely lifted. Initially, most analysts believed that China would remove its Covid restrictions gradually, but the reality has been the opposite. Among large countries, none have removed Covid restrictions as completely or as rapidly as China.

Previous experience from other countries suggests that consumption will return to pre-pandemic levels. With rapid reopening, rising household income, lifted restrictions on leisure activities, and improved consumer confidence, consumer spending is expected to drive the economy in 2023. Additionally, the use of savings accumulated during the zero-Covid period will further boost spending. The service sector is expected to see the greatest benefit from this increase in consumption.

The government's commitment to improving infrastructure remains strong, and with increased fiscal support, infrastructure investment is expected to be the second driver of economic growth. The negative impact of weak exports on manufacturing will be limited, as policy support, improved margins, and the recovery of domestic demand will boost manufacturing activity. The government's approach to the property market has also changed, reducing the risk of developer defaults, but it is unlikely that there will be a significant improvement in the market due to weak demand.

While there may be some negative effects on the economy in Q1 2023, a sustained recovery is anticipated to begin in Q2. I think its worthwhile to start bargain-hunting now (if you haven’t yet) while the valuation is still reasonable before the “Chio Bull” takes off.

@TigerStars @Daily_Discussion