CKGSB Investor Sentiment Index’s Q3 report records continued pessimism among Chinese investors towards the real estate market. It also finds investors’ expectations for China’s A-shares to be slightly lower than the previous quarter, but much higher than last October.
Interestingly, the index in Q3 didn’t find a significant drop in respondents’ expectations for the stock market, which largely results from their confidence in the market evaluations and in China’s growth potential. About 88.8% investors surveyed believe A-shares are reasonably valued or even undervalued. 70% of the respondents believe that A-shares will rise (63.2% and 85.3% for individual investors and institutional investors respectively). While respondents are cautious about China’s economic outlook, their sentiment overall remains stable. About 58.5% of investors (0.9 percentage point fewer than Q2) believed that China’s GDP in 2023 can grow by more than 5%.
Investors’ expectations for the real estate market in Q3, however, have deteriorated. Individual investors have remained pessimistic about real estate since August 2020. It’s notable that according to the survey in the third quarter, institutional investors, which have been more optimistic all along, now cease to look on the bright side. The net increase in the number of people willing to invest in real estate accounted for -31.7%, a plummet of 32.5 percentage points since August 2020.
Although investors believed that China will unlikely fall into a deflation, its lukewarm recovery has been dampened by weak domestic demand and a troubled real estate sector. The survey’s authors—Dr Liu Jing, CKGSB Professor of Accounting and Finance, and CKGSB researcher Chen Hongya—suggest that financial regulators issue slightly more aggressive monetary policies to stabilize the housing market in the short term, and for the government to provide a favorable environment for private businesses in the long run.
The Cheung Kong Investor Sentiment Survey (CKISS) is a survey on investor sentiment and expectations in the capital market, produced by Cheung Kong Graduate School of Business’ (CKGSB) Center for Investment Research. The first survey was conducted in January 2018. The survey now expands its scope to 13 major Chinese cities and is conducted on a quarterly basis with approximately 1,500 valid samples, including 1,000 samples from individual investors and 500 from institutional investors.
