Finding value in China

Chinese authorities cut deposit and lending rates in May, the third rate cut in six months. It comes after weak trade and inflation data was announced. Other easing measures, such as cuts to the reserve requirement ratio, have been announced already this year and more are expected to be implemented as Chinese regulators react to the slowdown in economic momentum within the country. In stark contrast to this slowdown has been the rapid rise of China’s A-share market. The run up in A-shares has often been marked by large daily swings, as new investors pour into sectors and stocks that happen to be popular. Little of the rally has had to do with corporate or economic fundamentals and much of it has been driven by liquidity, sentiment and momentum. Despite the stock market returning more than 100% in the past 10 months, valuations are not overstretched and the market is ripe for stock picking. Read the full report here: (VIEW LINK)