Where's next?

2023년 8월 2일

On July 24th, a meeting of the Chinese Political Bureau was held, and compared to the meeting in April, the overall tone was more positive. The meeting focused on large-scale consumer sectors such as automobiles, electronic products, and home furnishings, as well as service consumption sectors such as sports, leisure, culture, and tourism. There were some adjustments in the wording regarding the real estate sector. The meeting also emphasized the importance of an active capital market, and people are keenly observing the follow-up policy implementation.

With the reinforcement of positive signals for stable economic growth in the country, there is an expectation of improved demand for commodities such as copper, aluminum, steel, PVC, PP, and EB. Given the clarity of the bottoming-out policy, domestic stock indices have benefited significantly. Additionally, considering the relatively favorable valuations of domestic stock indices and the stock-to-bond ratio, it might be worth paying attention to the opportunities in the domestic stock market.

Regarding economic data, after the data for June, the PMI index for July also continued to signal a bottoming-out of the economy on a month-on-month basis. Manufacturing PMI showed a seasonal rebound, and there were signs of inventory bottoming-out. The new order index also showed an increase on a month-on-month basis. Further data validation will be crucial in confirming the bottoming-out trend.