Chinese equities have proved more resilient than other large economies as overall they have lost the least over the last month and the financial year to date, despite volatility caused by COVID-19 according to Frontier Advisors.
Data from Frontier found Chinese equities outperformed US, Japan, UK, and European equities with a loss of 4.5% over the last month, and a loss of 7.7% over the financial year to date.
Japanese equities followed with a loss of 9.9% over the month and a loss of 9.7% over the financial year to date. The worst-hit region over one month was European equities which lost 16% while UK equities lost the worst over the financial year at 21%.
The number of COVID-19 cases in China has decelerated and economic activity in the country shows some signs of improvement in March with purchasing managers’ index (PMI) data rebounding from a record low PMI.
“Retail data show sales were down 20% in February, and while there has been signs of an increase in activity over March, they remain below typical levels,” Frontier said.
“Authorities eased credit conditions in an attempt to avoid large increases of unemployment and nonperforming loans that would subsequently impact heavily on economic conditions.
“China’s coal consumption remains 20% below the usual average for this time of year.”
Frontier noted the key area to watch in coming months would be whether or not a new wave of infections occurred as quarantine measures were relaxed as infection rates slow.
On the domestic side, the ASX 300 lost 20.8% over the month and 20.9% over the financial year to date.