A commentary from Mark Martyrossian, Director at Aubrey Capital Management, on Shanghai and what the re-opening of the City post covid could mean for emerging market investors.
The official line today from Shanghai is that the City aims to reopen more broadly and allow “normal life” to resume from 1st June. There have been other announcements declaring the City’s epidemic under control whilst reiterating that the objective of preventing a rebound in infections outside quarantine areas remains paramount so that some restrictions will remain in place.
I think it is fair to say that zero Covid has cost President Xi some of his political capital. Although it seems likely that a third term as president will be awarded at the 20th National Congress of the Chinese Communist Party to hold in October, there is dissatisfaction with recent policies on business regulation and Covid which are widely seen as costing the country economic growth. It remains to be seen what impact this will have on Xi’s policies both internally and externally.
However, if the experience proves chastening and causes a reining in of the more assertive approach we have seen over the last couple of years this will go some way to repairing the negative views toward China. As we have written in the past, a succession of recent policies aimed at stimulating the economy have gone by largely unnoticed by investors – wasted measures foundering in the face of widespread lockdown. If easing of the lockdown continues, then this may well be an important catalyst for both economic growth and investor sentiment
About Mark Martyrossian
Mark has been involved in Asian equities since 1987. He was based in Hong Kong for the 1990s where he spent much of his time working in China. He joined Aubrey in 2017 as CEO having known Andrew Dalrymple, one of the founders of the business, for over 20 years. He recently handed on this role as CEO to Andrew Ward in keeping with the firm’s succession plan in order to concentrate on the development of Aubrey’s business. He is a Director and shareholder of Aubrey.
Do you know which under-the-radar stocks the top hedge funds and institutional investors are investing in right now? Click here to find out.