Amundi believe any dips are a chance to buy

China’s economy is expected to grow 4.8 per cent in 2023, at a time when its global peers are grappling with the dual threat of elevated inflation and slowing growth. Beijing’s loose monetary policy, which contrasts with a hawkish Federal Reserve, as well as a softening stance on private businesses, may offer Chinese shares an extra tailwind.

Chinese firms’ cheap valuations also stand out. At about 10.6 times its 12-month forward earnings estimates, the MSCI China Index is less expensive than both its emerging-market counterpart and its own five-year average.

Still, tensions with the US will remain a key source of market volatility. A weak housing market is another cause for concern. Although a slew of rescue measures have stabilised investor mood, analysts have warned that a full recovery will take months, if not years. That’s because in addition to depressed home demand, many developers remain shackled by a heavy debt pile.

“The setup for China equity going into 2023 is looking good with odds still towards further upside, but I don’t expect a smooth ride,” said Ng Xin-Yao, investment manager of Asian equities at Abrdn.