Sustained Recovery for China Equities May Require Stronger Stimulus — Market Talk

What happened

Julius Baer analyst Richard Tang says China's equity market could stabilize temporarily as the country's "national team" steps up buying, but a sustained recovery may require stronger stimulus, potentially in early 2027.

Confirmed

Global impact / market context

National-team buying, which means state-linked purchases of shares, may only create a temporary floor. Without stronger stimulus, meaning government support for the economy, investor returns could stay weak until early 2027, so patience and income-focused holdings matter.

Analyst inference

Recent declines reflect tighter capital and tax policies, weaker growth expectations, disappointing corporate earnings and liquidity pressures from increased fundraising. Liquidity pressures mean cash is harder to raise. Julius Baer favors a "get paid to wait" strategy in high-dividend offshore Chinese banks and telecom stocks.

Analyst inference

What to watch

1. Historical evidence suggests heavy national-team buying typically precedes a temporary market trough within one to three months, so watch whether buying accelerates before a possible trough. Confirmed
2. Julius Baer recommends a "get paid to wait" strategy, favoring high-dividend offshore Chinese banks and telecom stocks, so watch dividend-focused holdings for income while waiting. Proposed
3. Longer-term investors may consider adding artificial intelligence infrastructure stocks toward year-end, so watch whether AI infrastructure shares attract buyers as stimulus expectations build. Analyst inference

Evidence

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