It’s always dangerous to make predictions, particularly when it comes to Stock Markets, but I do recall saying back in March this year (see China Bites issue “Investing in China” on 5th March 2019) that “China’s stock markets were the worst performing in the world in 2018 so don’t be surprised if they top the charts in 2019”.
As a result, the FT’s recent headline “China’s stock market on track as world’s best-performing in 2019” caught my eye with the comment “even after accounting for weakness in China’s renminbi, the country’s stock benchmark is up more than 28% this year in dollar terms” which places it ahead of the UK’s FTSE 100 (8.5%), Japan’s Topix (11.5%) and the US S&P 500 (22.3%) with just less than two months to go.
The 31% rise in China’s stockmarkets this year have been attributed to “a revival of domestic investor confidence and continuing international inflows”, including the stock connect programs in Hong Kong and the decision by MSCI to “raise the share of Chinese stocks to be included in its flagship Emerging Markets benchmark”. Most of this was quite predictable actually, including the old adage that under-performing markets tend to over-perform in the following year.
Might be time to look at this again?