Investment Outlook on Chinese Stocks

JPMorgan analysts indicated that investments in Chinese stocks related to Beijing’s stimulus plans are likely to revive by late November. This comes as the government outlines additional fiscal support plans.

In recent sessions, Chinese markets have seen a decline after investors reacted negatively to Beijing unlocking 10 trillion yuan ($1.6 trillion) in new debt aimed at bolstering the economy. Markets were hoping for more targeted fiscal measures instead.

However, JPMorgan observed that signals from the government indicate such targeted measures are forthcoming, along with support likely directed at technological development and social security.

Investing focus

According to JPM, trading related to domestic stimulus has been favoring high-beta domestic consumption, property, and financial sectors. As investors prepare for the Central Economic Work Conference scheduled for December, trading activities are expected to increase by late November.

December also marks a meeting of China’s Politburo, which could further influence market trends.

Future outlook

Despite the new debt measures, JPMorgan forecasts a significant improvement in China’s government debt by 2028, painting a promising picture for infrastructure stocks and government-facing software vendors.

Impact of Trump Tariffs

JPMorgan noted that the trading environment surrounding higher U.S. trade tariffs tends to favor stocks with a more localized focus, adversely impacting high-beta export stocks like internet services and consumer electronics.

With President-elect Donald Trump promising a 60% import tariff on Chinese products, JPMorgan projects a negative impact of 1.3 percentage points on China’s GDP growth. Consequently, they have revised their 2025 GDP forecast for China down to 3.9% from 4.6%.

Nonetheless, higher tariffs have historically supported tech stocks with local exposure, stock brokers, and low-yield defensives such as oil and defense companies.

Furthermore, JPMorgan reported that third-quarter Chinese earnings have remained robust, defying typical seasonal weaknesses, and property markets in tier-1 cities are beginning to see improvements.