Within the first 15 days of the new year, the most talked about event in the investor community is “China Reopening “. It is evident, in the flows as well because the China ETF basket saw a total inflow of $870 million within the first 15 days of January compared to the same flow during the full month of December 2022.
The real reason for this anticipation is because of the exit from the “Zero Covid “ policy. But does it lead to an exponential growth in consumer spending that was witnessed in other countries when they reopened? This question will be answered over the next two to three weeks when the Lunar new year holiday data gets released.
The other focus is on the real estate sector as the government brings out easier policies and funding for the restart of the stopped projects. As per reports, the current projects that have been restarted now amount to 20% of the total stopped projects.
The coming two quarters will define the difference between the actual and estimated growth due to the reopening. As the majority of global brokerages have already upgraded the target growth for 2023.
If the reopening does play out as estimated then it will result in a second round of commodity inflation that might occur as the rest of the world goes through a low or even a negative growth period hampering the probability of a rate cut or even a pause in the interest rate cycle.