4 months after the COVID-19 outbreak in China, the situation in the country is gradually improving, due to fast and aggressive measures taken along three dimensions: Virus containment, domestic growth recovery and fiscal and monetary policy easing.
Although GDP will be down circa 10% in Q1, a faster recovery is expected compared to the rest of the world with economic activity picking up again in March, e.g. major production facilities operating on 50 – 60% of their capacity.
The Chinese government announced public investments of up to US$ 394 bil. to boost GDP growth with focus on technology companies and large infrastructure projects.
1. Take early aggressive measures such as introducing 1.5 m safety distance between people, ordering everybody to wear a mask outside of their homes.
2. Provide fiscal stimulus to boost economic activity
3. Ensure supply security: Ensure food production and supply network can continue to function
Generally, investors should focus on industries that benefit from China’s fiscal care package. Apart from real estate, this could be for example businesses focusing on Artificial Intelligence and 5 G wireless technology.
Looking for good opportunities? Consult your relationship manager to find out which areas in China might be interesting to invest in at the moment.
Source: Wind, Goldman Sachs Global Investment Research
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