What an eventful month! The Fed cut rates by 50bps, and China announced both monetary and fiscal stimulus ahead of the Golden week. While the Chinese government’s policy pivot was surprising, it is critical for its property sector to stabilize. With China’s high rate of home-ownership, falling property values creates a falling wealth effect which would negatively affect consumer confidence and lead to dampened consumer spend.
We view this as China’s ‘Whatever it takes’ moment and believe it will underpin confidence going forward. While the path to recovery remains uncertain, Chinese equities continue to represent good value. Our focus on high-quality businesses, strong cash flow and a shareholder-friendly dividend policy continue to give us confidence in delivering strong performance through market cycle.