Take a leap! At the gap between expectations and reality, that is — always the chief driver of the stock market. At present, it may be a big daunting chasm. Fear of the impact of the tragic, grinding war in Ukraine and hot overseas inflation. Fear of the “tightening” at central banks across the world hurting China’s export demand. And prolonged Covid restrictions in Shanghai and Beijing. All this and more has torpedoed global sentiment thus far this year. But beneath the sour surface lurk powerful positives — extra strong because they are unseen. Their stealthy presence amid widespread gloom upends global recession fears and provides evidence that brighter days are ahead for China stocks.
You needn’t look far to see rampant negativity. Many in China have lost hope that the 15-month bear market will ever end. Institutional investor confidence in Asia has plummeted since November. Elsewhere, over half of U.S. respondents were bearish in the American Association of Individual Investors’ May 4 survey. Global fund managers have slashed equity allocations and raised cash, according to the Bank of America’s latest survey. It also showed economic pessimism is at its highest since records began in 2007.
