Uncertainty looms over China's market as global investors anticipate volatility in 2025

After a challenging year, the global investment community remains cautious about the future of Chinese equities, following a series of policy missteps in 2024. Major financial institutions, including Morgan Stanley, UBS, and Goldman Sachs, are closely monitoring China's policy direction, particularly regarding stimulus measures aimed at reviving growth.

Investment banks predict significant volatility in Chinese stocks as they await greater transparency from Beijing, especially regarding its approach to addressing deflation, potential new tariffs from the US, and the struggling property sector, Caliber.Az reports via foreign media.

Many, such as JPMorgan Asset Management and T. Rowe Price Group, seek clear signs of economic stabilization and corporate earnings recovery before committing further investments.

Goldman Sachs, however, stands out as the most optimistic, projecting a 13% rise in China’s primary equity benchmark. The firm is confident in the potential for accelerating earnings growth and improved valuations, bolstered by supportive government policies.

So far, China's attempts at broad policy easing have lacked concrete execution. Despite optimistic language from the December Politburo meeting, traders remain skeptical, pointing out that without follow-through on policy pledges, the stock market’s recovery will continue to face obstacles.

According to Aaron Costello, head of Asia at Cambridge Associates, the market will remain stagnant until there are actionable policies that alleviate deflationary pressures and revive corporate earnings—both of which will take time to materialize.

By Vafa Guliyeva