Year of The Ox
Friday marked the start of the Chinese Lunar New Year and the welcoming of the Year of the Ox. The Ox is a strong and determined animal, so we should see economic prosperity and strength in China in the new year. Let’s take a brief look at how China’s markets have performed over the past 12 months.
China has faced extreme challenges in the past 12 months as the country has had to deal with the deadly virus’s fallout. But despite the virus originating in China, the country has seen impressive economic growth.
China initially set-in place strict lockdown restrictions, gaining some criticism from people around the world. However, China’s lockdown methods seem to be effective as the country continues to report declining infection numbers and as their economy continues to recover.
Over the past 12 months, the S&P 500 has delivered a sizable return of 11%. By comparison, the MSCI China Index has delivered a whopping 40% return over the past 12 months.
In the first quarter of 2020, the lockdowns strangled China’s gross domestic product, falling by 6.8% year on year. However, in the fourth quarter of 2020, China’s GDP skyrocketed back to 6.5% year on year – their economy is recovering quickly.
When looking at potential investment opportunities in China, a popular option is in clean energy and technology. Last year, President Xi Jinping said China would aim to hit peak carbon emissions by 2020 and achieve carbon neutrality by 2060. China’s road to green can present investors with opportunities to make some green as the country focuses on renewable energy growth.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.