Nearly six months after China lifted all Covid-19-related curbs, investors are still waiting for the strong economic rebound they had assumed the policy pivot would unleash.
The much-vaunted recovery in lockdown-free China has thus far fallen short of expectations, underscored by data released earlier this week by China's National Bureau of Statistics.
Analysts said that while policymakers have pledged to boost domestic demand and revive market confidence to make the economic recovery more sustainable, a lack of substantial fiscal or monetary stimulus is holding back the recovery they had expected earlier in 2023.
Meanwhile, for investors who bought into the euphoria early in 2023, pickings in the stock and bond markets of the world's second-largest economy remain slim, with the MSCI China Index's total return slipping into negative territory.
"We have been warning since the beginning of 2023 that China's reopening will disappoint market expectations of a V-shaped recovery. This view is now materialising nicely," said RHB Bank's group chief economist and head of market research Sailesh Jha.
RHB's forecast for China's 2023 gross domestic product (GDP) growth stands at 4 percent, versus the 5.7 percent estimate of analysts polled by Bloomberg.
Below-consensus views on China, such as that of Dr Jha, have now started to rub off on at least some other market players. JPMorgan, Barclays and Nomura are among prominent investment banks that have taken the cue from the latest official data to cut their projections for China's full-year growth.
The data showed industrial production contracted 0.5 percent in April compared with March, while monthly car sales also declined as consumers adopted a cautious stance even as automakers reduced prices.
This story is from the May 19, 2023 edition of The Straits Times.
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This story is from the May 19, 2023 edition of The Straits Times.
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