China Stock Rally Calls for Caution, Says BofA

Overview

After underperforming for years, Chinese stocks are on a tear, rising more than 16% so far this year and outpacing many regional and global markets. The advance is led by growing optimism that technological breakthroughs like DeepSeek and a sustained pivot to consumption by Chinese officials will help boost demand.

But there are questions about the sustainability of the rally. Have fundamentals for China really improved? And are investors ready to ditch US exceptionalism and Europe’s revival to invest in China equities? If the 2015 market rally and pullback is any guide, investors should brace for a near-term correction, even though equities have entered a bull market in the next 3-5 years, according to Winnie Wu, chief China strategist and co-head of China equity research at Bank of America. She joins John Lee and Katia Dmitrieva on the Asia Centric podcast.