Is your China investment thesis, or lack thereof, based on a “System One” or a “System Two” approach? Find out by reading our 2024 outlook for China’s markets.

2024 China Outlook Key Highlights:

• China’s underperformance versus the US over the past decade is not unique and has largely been driven by external factors such as an ever-rising US dollar exchange rate, index idiosyncrasies, and the shift from active to passive management styles in Emerging Markets (EM).
• In 2023, China’s consumer recovery was focused on services and not as broad as markets had anticipated.
• In 2024, we believe the recovery could broaden and accelerate while stimulus measures implemented in 2023 may begin to have a positive impact on the economy and stock market.
• With interest rates at decade highs and the potential for a rate cut cycle, the coming decade might see the MSCI Emerging Markets Index outperform the S&P 500 Index on an annualized basis like it did from 2001 to 2012.¹
• China, and especially China Internet, represented by the KraneShares CSI China Internet ETF (Ticker: KWEB), may lead EM performance in 2024 and subsequent years due to its low relative valuation, low investor positioning, and sensitivity to improvements in China’s economic data.

Report Contents:

• Introduction
• A Gradual Recovery
• Preparing For The Next Decade
• Conclusion

1. Data from Bloomberg.