Re-assessing China Risks (Part Three)

Zero covid risk is gone, but what about the rest?

I am Qi Wang, CEO of MegaTrust Investment (HK), a boutique China fund manager based in Shanghai and Hong Kong. Total 25 years of experience in Chinese and global equities. This is my blog for MegaTrust clients and professional investors. If you’d like to learn about China from a practitioner’s point of view, this is the right newsletter for you.

This is part three (the final part) of my reality checks on China investment risks. You can find part one and two here.

This week’s National People’s Congress was right to point out consumption’s importance to China, as export growth slows in 2023. But not sure if the government realizes that low consumer confidence is the top challenge.

In addition, there is a small risk that inflation risk will resurface in the second half.

China Reopening Risks and Opportunities

I spoke to David Thomas of Think Global about this in early December 2022, when the market was still unsure if China would open up or not. I was well ahead of the street by saying “China is slowly but surely opening”, in as early as September 2022. This was when most China pundits thought China would not reopen until the first half of 2023…

China Reopening Risks and Opportunities

What’s changed in the last three months? China did open up, faster than expected. Here are some data points to track the reopening progress:

• Strong property sales in February, as I noted in my last post.