Jefferies' Simon Powell remains constructive on the Chinese economy despite Beijing's decision to abandon its zero-Covid policy amid rising cases.
"We think the government is going to stimulate the property market and avoid a catastrophe in terms of domestic residential property in China and therefore it's reasonably safe to start to be overweight China," Powell, global head-thematic research at Jefferies told BQ Prime's Niraj Shah.
However, risks persist with this investment strategy, he warned.
Besides China's Covid policies, the country faces risks related to its demographics. With a declining birth and marriage rates, the country's population may fall nearly 50% by the turn of the century, according to Powell.
By 2100, China's population will be 800 million people or less and the biggest hollowing out is going to be in the working age population, he said.
"So missing workers is a theme that investors need to understand is a long-term, multi-year theme in China."
Emerging markets will do possibly better in 2023 than developed markets, according to Powell.
While the U.S. and Europe are border-lining recession, emerging markets are expected to do better in 2023 aided by their low cost base and comparatively stable supply chains, he said.
"They (emerging markets) have pretty good fiscal policies. China wasn't giving out free money the way that the U.S. or Europe were giving out free money," he added.
Meanwhile, Powell is also constructive on India and doesn't believe that India's continuing growth is currently "all priced in" the stock markets.
".. Continuing to see flows into India. I think it offers a good long-term story from a multi-year perspective which is why it's so expensive." he said.
Watch the full interview here:
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