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JPM: Better China trading could have more room to run

Published 05/13/2024, 01:58 PM
Updated 05/13/2024, 02:00 PM
© Reuters.  JPM: Better China trading could have more room to run

Analysts at JPMorgan believe "better China trading could have some more to go," with the assessment that it could last through summer.

After decline spell between Jan 2023 and January of this year, where MSCI China lost almost 40%, it is now up 25% from the lows.

While JPMorgan does believe that the longer-term structural concerns of deflationary backdrop, excess capacity, real estate demand-supply imbalances, credit saturation and global decoupling are finished, they remain positive, stating the positive trading could last through July/August.

This is based on increasing market hopes that the worst of housing weakness has passed and the US elections heat up in earnest.

Despite the positives, JPMorgan cautions that Real Estate could show some less negative trends in the second half of this year, although they note "it is not clear that we have reached an equilibrium."

In addition, deflationary pressures continue, with excess capacity being created in certain areas. Nevertheless, the investment bank states it continues to believe in a tactical more positive case for China equities.

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