KUALA LUMPUR, March 14 (Bernama) -- The FTSE Bursa Malaysia KLCI (FBM KLCI) ended the week slightly higher, in line with regional indices despite the weaker performance on Wall Street overnight. At 5 pm, the FBM KLCI rose 2.12 points or 0.14 per cent to 1,512.15 from Thursday’s close of 1,510.03. The market bellwether opened 10.08 points lower at 1,499.95, and moved between 1,493.29 and 1,516.25 throughout the day. On the broader market, gainers outpaced losers with 680 to 292, while 437 counters were unchanged, 1,009 untraded, and 13 suspended. Turnover was marginally lower at 3.24 billion units worth RM2.5 billion from 3.25 billion units worth RM2.90 billion on Thursday.
China’s stock market has seen an impressive rally this year, and according to Sean Taylor, CIO and Portfolio Manager at Matthews Asia, this surge is being driven by tech, artificial intelligence (AI), and the recovery of the private sector. The big question now: Is this rally sustainable?
Key Drivers of the Rally:
Tech and AI Lead the Charge: The rally is largely powered by the tech sector, with AI playing a significant role. This tech-driven surge is seen as a positive signal for growth, especially as China’s private sector begins to recover.
Private Sector Rebound: One of the most important factors fueling growth is the warming of China’s private sector, as evidenced by a meeting between President Xi and key private entrepreneurs like Jack Ma. This shift signals the potential for job creation and more investment in the private sector, which in turn could fuel further market growth.
No Policy Hope, But Still Up: Remarkably, this rally is occurring without the usual policy hopes that have driven past booms. In previous years, the market often surged on the back of hopes for government stimulus, but this time the rally is fueled by real economic factors like AI and earnings upgrades.
Challenges to Watch:
While the rally is impressive, Taylor cautions that market conditions still present some risks. There’s ongoing weakness in the Chinese consumer market, and inflation data suggests lower confidence in spending, especially in major cities like Beijing and Shanghai. Moreover, while housing is showing signs of recovery, price stability remains uncertain.
What’s Next for China’s Market?
Sustainability of Growth: Taylor believes the rally could continue, though it may experience some consolidation in the short term. The tech sector will likely remain a key driver, but broader participation from the “old economy” sectors will depend on domestic economic growth.
Shifting Global Investments: The rally was initially driven by U.S. tech investors looking for opportunities in China, but now, global funds are beginning to pay more attention. As a result, China could continue to outperform other Asian markets, especially if the U.S. market starts to slow down.
China's Competitiveness: China’s tech companies are proving to be as competitive as their U.S. counterparts in certain areas. This competitive edge is one of the driving forces behind the market rally, and as more investment flows in, China’s financial markets could see sustained growth.
Investor Sentiment:
There’s still some nervousness among international investors, especially in the U.S., but Taylor remains optimistic that China’s market will continue to rise in the medium term, with emerging markets and Asian funds likely to jump on board next. The fact that locals are increasingly confident about the market recovery is also a good sign.
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