Fidelity International Declares Current China Rally as Fundamentally Driven

Fidelity International’s portfolio manager George Efstathopoulos notes that the current rally in Chinese markets, especially in technology shares, is fundamentally driven, unlike prior rallies based on speculation. Technological advancements, particularly in artificial intelligence, and improved economic data are fostering optimism, as demonstrated by significant gains in the Hang Seng Index this February.

Fidelity International has observed a notable shift in the dynamics of the recent rally in China’s stock market, particularly regarding Hong Kong-listed technology shares that have performed well in February. Portfolio Manager George Efstathopoulos emphasizes that unlike previous rallies, which were primarily fueled by speculation regarding market stimulus, present market movements are driven by robust fundamentals.

Efstathopoulos highlights the advancements in Chinese artificial intelligence and innovations like DeepSeek, which demonstrate that China is evolving technologically and narrowing the gap with the United States. These developments serve as a timely reminder of China’s capability to lead in technological innovations.

Furthermore, Efstathopoulos points to encouraging economic data, particularly in consumption, which indicates that fiscal policies are beginning to effectively stimulate the economy. Although more efforts are required to sustain this momentum, there are signs of improvement in the real estate sector. Notably, Hong Kong’s Hang Seng Index has surged 17% in February, with its technology sector, represented by HHSTECH, increasing by 24%.

In summary, Fidelity International perceives this rally in Chinese markets as fundamentally driven, contrasting with previous market behaviors based on speculative hopes. Innovations in technology and improved economic indicators signify a promising outlook, despite the need for continued policy support. As evidenced by significant gains in the Hang Seng Index, the market may be experiencing a noteworthy turnaround, suggesting stronger investor confidence in China’s economic trajectory.

Original Source: www.tradingview.com