Chinese investor participation will revitalize the country’s market, Mark Mobius said. But they will only return once China solves its property-sector and debt problems. Real-estate is seen as a key investment in China, the market veteran told Bloomberg TV. Loading Something is loading.
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For Chinese markets to bounce back, the country’s domestic investors must jump back in, emerging markets veteran Mark Mobius told Bloomberg TV on Friday.
To do so, Beijing must fix the ongoing problems the country faces in its property sector while also easing debt burdens.
“Going forward, it’ll be the Chinese investors who will revive the Chinese market, because at the end of the day, it’s not foreign investors who drive the Chinese market. It’s the Chinese investors,” the Mobius Capital Partners co-founder said. “And I believe they’re going to be back.”
After shedding its COVID-era restrictions in December, China’s growth accelerated in the first quarter. But the revival rapidly slowed in recent months, with data from May showing that cooling trends in production, retail sales, and investment continued from April.
As the economy has disappointed, even investors in China are bailing on Chinese markets and shifting their money overseas. Similarly, foreign investors have been selling Chinese stocks at a faster rate.
To spur economic activity, China’s central cut key interest rates this week, and the government is reportedly planning a stimulus package aimed relieving debt burdens among local governments and encouraging more real estate purchases.
In China, over 70% of the country’s wealth is tied to real estate, and the sector’s recent reputation for defaults and oversupply has weighed heavily on the economy.
“The property situation in China was a real disaster. Because remember, the Chinese look at property as an investment — as a very key investment, a much bigger thing than in other parts of the world,” Mobius said. “So when property prices go down, they feel poor.”