Why the Chinese stock market is attractive in 2022

If investors go to invest in the stock market in 2021, they may see the investment portfolio decline. This was due to the stock market down 30% due to policy changes, strategic plans and enforcement of data usage laws. Therefore, there is a question that when the stock market has receded considerably. Is the Chinese stock market still attractive?

The main factor that will be attractive to the Chinese stock market in 2022 starts with the growth of China's economy. The International Monetary Fund (IMF) forecasts China's economic growth (GDP) at 4.8%, while the Chinese government has announced its GDP growth forecast of 5.5%. The economy was supported by the export sector that expanded continuously from the previous year.


For the Fiscal Policy, the Chinese government has set a fiscal deficit of 2.8 percent of GDP, down from 3.2 percent a year ago, while monetary policy remains accommodative. This corresponds to the reduction in the interest rate for the 1-year loan, which is the policy rate to 2.85%.


In addition, the Chinese government spoke more about its policy that is more positive for the Chinese stock market. To build investor confidence and stabilize the Chinese stock market. It said it would support Chinese companies wishing to list on foreign exchanges. It will also work with the United States to resolve the disclosure issues of Chinese companies listed on US stock exchanges.

For the attractiveness of the Chinese stock market Looking at the market fundamentals using the P/E ratio, the China Shanghai Composite (SSEC) is around 16.10x, and the Hang Seng Index (HIS) is 13.86x. Emerging markets in Asia such as Indonesia Stock Market have P/E Ratio approximately 25.56 times, Malaysia Stock Market has P/E Ratio approximately 18.91 times, Philippines Stock Market has P/E Ratio approximately 22.34 times and Thai Stock Market has P/E Ratio approximately 19.71 times, making Chinese stock markets It is quite attractive to invest in the long term because the present value is at a cheap level


A factor that makes China attractive for long-term investments is the change in country development plans last year that focus on domestic consumption. Reduce dependence on foreigners and New Economy that drives the economy to be able to grow in the long term. and a great emphasis on development and investment in the renewable energy sector. It aims to grow around 8.7% per year, including a variety of stimulus policies that can be implemented if needed, such as the use of the National Fund.


However, if looking at the short term, there may be a factor that makes the Chinese stock market still at risk, namely the Zero Covid policy may cause the economy to slow down. Because the closure of the city that is an economic zone will cause the stock market to decline. But if looking optimistic, it's a good time to invest.

Among the industries that are attractive to invest in the Chinese stock market are government-backed stocks, clean energy, electric vehicles, and businesses important to the Chinese economy such as semiconductors by choosing stocks with strong fundamentals and opportunities for long-term growth in performance

This is because the Chinese government is strict with its business practices and may change policy rapidly. This affects the volatility of the stock market, so before making an investment decision, you should study the information. Follow the news closely and should focus on long-term investment.