‘Depth and breadth’ with strong liquidity anchor China stock outlook: JPMAM

Chinese and Hong Kong stocks have underperformed an AI-driven rally across Asia, but J.P. Morgan Asset Management remains bullish on both markets, a senior executive told the South China Morning Post. Ayaz Ebrahim, the firm's CEO for Singapore, Southeast Asia, and India, highlighted that Chinese markets offered "depth and breadth" and sufficient liquidity, despite headwinds.

He noted that China has a strong domestic investment base, which is evident in quality companies showing 15 to 20 percent earnings growth in technology, healthcare, and export manufacturing. Ebrahim acknowledged that some sectors, such as property, have been challenging, and growth has been slower than expected. Nonetheless, the large Chinese economy and its efficiency as an exporter provide ample opportunities for investors.

Regional markets, boosted by the global AI hardware boom, have outperformed, with Taiwan's benchmark up about 54 percent and South Korea's Kospi nearly doubling. While international capital has largely flowed into South Korea and Taiwan, Ebrahim believes that Beijing's support for domestic technology and AI companies will continue to attract investment.

Hong Kong, with its "A+H" listings, accounts for nearly 70 percent of the city's IPO proceeds, making it a key player in the region. The Chinese government's recent five-year plan includes loosening listing rules and strengthening links with mainland markets. Ebrahim dismissed the notion of a zero-sum rivalry between Hong Kong and Singapore, describing the competition as "healthy" and stressed that both cities remain important in their respective regions.

J.P. Morgan Asset Management has fully deployed its S$6.5 billion allocation from the Central Bank of Singapore's Equity Market Development Programme, with half invested in Singaporean equities and the other half spread across broader Asian markets. Ebrahim warned that interest-rate uncertainty due to sticky inflation is the primary headwind for regional equities, but he remains optimistic, advising investors to focus on a long-term horizon and not panic in the face of short-term volatility.