China Asset Management sees sideways market for Chinese equities in September
China Asset Management expects Chinese stocks to trade in a narrow range this month, with strong earnings providing support but US Federal Reserve policy and oil prices capping gains. The fund manager advises buying on dips rather than chasing rallies. A faster IPO pace may also tighten liquidity.
The fund manager, overseeing over two trillion yuan in assets, advises a cautious approach, suggesting investors accumulate shares during market pullbacks instead of pursuing upward momentum. A faster schedule of new stock listings during the third quarter is anticipated to tighten available capital, while robust first-half corporate profits are expected to provide a price floor.
The equity market's recent path shows a sharp July decline, particularly in technology sectors, followed by a partial August recovery. However, sentiment turned cautious again as September began, with the market nearing July lows after the US central bank chief emphasized inflation control and a strong US jobs report reduced expectations for near-term rate cuts.
A sideways market could test the patience of retail investors in China, who may see limited short-term gains and face higher transaction costs if they trade frequently. The cautious stance may also influence broader sentiment, potentially slowing capital inflows. If liquidity tightens due to faster IPOs, smaller firms could face financing challenges, while market stability may hinge on external factors like US policy, affecting household wealth and investment confidence.