The world’s second-largest stock market has started 2024 on a dismal note, with the MSCI China Index already down more than 4 percent so far this year. The third consecutive annual decline will culminate in 2023.
“The bigger picture is that weak demand is leading to a deflationary environment, which bodes particularly well for companies that cannot achieve higher volumes at lower prices,” said Daisy Lee, fund manager at EFG Asset Management HK.
Tesla is cutting prices in China to maintain its grip on the premium electric vehicle market
Tesla is cutting prices in China to maintain its grip on the premium electric vehicle market
“Retail prices are falling rapidly,” Morgan Stanley analysts wrote in their 2024 outlook for the Chinese electric vehicle sector. “While domestic brands, in general, fared better than luxury and foreign brands in terms of expanding discounts, we expect discounts to expand further in the first quarter of this year on the back of seasonal influences.”
Many economic and market observers hope lower interest rates and government spending will help prevent the country from entering a deflationary spiral.
JD.com and Alibaba’s Taobao push ‘refunds only’ policy to rival Pinduoduo strategy
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A survey conducted by Morgan Stanley late last month indicates that consumer sentiment has improved seasonally before the holidays. However, “sustainability is in doubt amid slowing economic recovery,” analysts, including Lilian Lu, wrote in a note.
Salary cuts and job losses remained among households’ top concerns, they wrote, adding that the number of consumers expecting the economy to deteriorate rose by 2 percentage points from November to 13 percent.
Fast food companies are still in a long battle for customers, with some offering full meals for around $3. It’s hard to make money at such low prices.
“We expect industry margins to erode until the irrational price war ends,” Kevin Yin, an analyst at JPMorgan Chase & Co., wrote in a note while lowering estimates for Yum China. “No player is immune” to the headwinds caused by slowing demand growth in the country, he said.