Strong Confidence · Opening a new game丨Upgrade·Increasing holdings·Optimistic——Three key words explain why foreign financial institutions are optimistic about China's economy
Xinhua News Agency, Beijing, February 2. Topic: Raising, increasing holdings, optimistic——Three key words explain why foreign financial institutions are optimistic about China's economy
Xinhua News Agency reporter
Continue to raise China's economic growth forecast, increase holdings of Chinese domestic stocks and bonds, and be optimistic about China's economic development trend... In the eyes of many foreign financial institutions, the current world economy is facing complex challenges, and China's economy is one of the few positive factors that boost global expectations. It is a "key driver" of global economic growth.
Keyword 1: "Upgrade"
A few days ago, the International Monetary Fund (IMF) released the update of the "World Economic Outlook Report", which significantly raised the forecast for China's economic growth this year to 5.2%.
Not only the IMF, but also large international financial institutions have also raised their forecasts for China's economic growth in 2023: Morgan Stanley raised it from 5% to 5.7%, Goldman Sachs raised it from 4.5% to 5.5%, and Nomura Securities raised it from 4.8% to 5.3%.
JPMorgan Chase, UBS, Deutsche Bank, etc. have also raised their expectations for China's economy.
The upward adjustment of China's economic growth forecast is the most straightforward expression of foreign financial institutions' confidence in China's economy.
In contrast, all parties in the international financial market are not so optimistic about the global economic outlook in 2023: the IMF predicts that the global economic growth rate in 2023 will be 2.9%; 1.9%.
The World Bank even predicts that the global economic growth rate will slow down to 1.7% in 2023.
"China's economic recovery this year may be the main hedge against the risk of a global recession," said Yu Xiangrong, chief economist at Citigroup China.
In fact, during the three years since the COVID-19 epidemic spread globally, China, as the world's second largest economy, has always been the main force of world economic growth: in 2020, China will become the world's first major economy to achieve positive economic growth; in 2021, China's economy will The scale exceeded 110 trillion yuan, accounting for 18.5% of the world economy that year, with an average growth rate of 5.1% in two years; in 2022, China's economy has overcome many difficulties and achieved a year-on-year growth of 3%, faster than most major economies.
Now, China's economy is once again being pinned on high hopes.
"China is the only major economy in the world that is expected to post decent growth in corporate profits and GDP next year (2023). This is good news for the global economy. Just as the economies of the US and Europe are slowing, it raises the bar for the world economy to avoid The possibility of a recession." The internationally renowned financial publication "Barron's Weekly" wrote on its website in December last year.
Keyword 2: "holding increase"
In January of this year, northbound funds accumulated a net purchase of 141.29 billion yuan on the Shanghai and Shenzhen Stock Exchanges, and the net purchase volume exceeded the scale for the whole year of 2022.
During the same period, the MSCI China Index rose by nearly 12%, and the cumulative increase has exceeded 40% for three consecutive months.
Increasing holdings of Chinese securities has become the most direct expression of foreign financial institutions' outlook on China's economic prospects.
In the past three years, foreign financial institutions have always paid close attention to the Chinese market.
In 2020, the overall net increase in foreign capital holdings of domestic stocks and bonds exceeded US$200 billion; at the end of 2021, the total market value of domestic listed stocks and bonds held by foreign investors reached US$1,298.4 billion, an increase of 23% over the end of 2020.
Although in the second half of 2022, the global financial market will fluctuate sharply, resulting in large-scale capital outflows from Europe, Asia, South America and other places, but now, foreign financial institutions generally believe that the factors that have caused great pressure on them are decreasing, which further Stimulate their investment in China's financial markets.
Bank of America transferred the Chinese stock market to "tactical overweight"; Morgan Stanley is optimistic about the Chinese stock market and "recommends to take advantage of the current opportunity to buy on dips"; Goldman Sachs' stock strategy team has continuously raised the 2023 MSCI China Index in the past two months Earnings growth forecast, finally raised from 8% to 17%...
According to the statistics of the State Administration of Foreign Exchange, in December 2022, the net increase in domestic bond and stock holdings by foreign investors was US$7.3 billion and US$8.4 billion, respectively.
In the first half of January 2023, foreign capital’s net purchases of domestic stocks and bonds totaled approximately US$12.6 billion.
Keyword 3: "optimistic"
Foreign financial institutions are optimistic about China's economy not only because of the recovery of China's economic growth, but also because of the resilience and strength of the Chinese economy, as well as its potential in the future.
Optimistic about China's economy lies in the long-term development trend of China's economy.
"China is shifting from pursuing high-speed growth to pursuing high-quality development, and paying more attention to the quality of economic growth." Wen Zeen, President and Chief Operating Officer of Goldman Sachs Group, said in December last year, "Goldman Sachs has always been a heavy investor in the Chinese market and will continue to be heavy in the future. Investing in China, we are very optimistic about China's future development prospects."
Optimistic about China's economy also lies in China's continued expansion of financial opening.
"China unswervingly promotes high-quality development, deepens reform and opening up, especially continues to promote financial opening up on a higher level, which provides huge development opportunities for foreign financial institutions." Standard Chartered Bank (China) President, President and CEO Vice Chairman Zhang Xiaolei introduced that, especially in the past three years, relying on China's development and opening opportunities, Standard Chartered China has achieved sustained and steady growth in performance and achieved breakthrough growth in multiple business segments.
Optimism about the Chinese economy lies in the bright blueprint for the future of the Chinese economy.
Liu Linan, director of macro strategy for Greater China at Deutsche Bank, mentioned that the report of the 20th National Congress of the Communist Party of China proposed to accelerate the construction of a digital China.
"In the next ten years, China will continue to follow the high-quality development of the innovation-driven economy, and digital transformation will still be a powerful engine to promote China's economic growth." Liu Linan said.
(Reporters Liu Kaixiong, Li Yanxia, Wu Yu, You Zhixin)