The strategist emphasized that China controlled the pandemic early on, paving the economy’s path to recovery. Consequently, Chao noted that the economy could “continue its recuperation somewhat interrupted,” expressing optimism towards the stock market.
In February, before the pandemic, the SSE Composite index hovered at 3,071 at the peak of the first quarter. The Chinese stock market has increased by more than 12% since pre-pandemic levels, completing a V-shape recovery.
Strategists are also optimistic about the relatively positive stance of the PBoC to provide enough firepower to aid economic recovery.
The intensifying geopolitical risks resulting from direct restrictions on Chinese companies place pressure on China’s stock market.
When asked about the potential implementation of additional restrictions on more Chinese companies, President Trump said: “We’re looking at other things, yes we are.”
Whether the U.S. and China could offset geopolitical risks through the continuation of trade discussions is still uncertain.