JPMorgan Asset Management's Zhu Chaoping: Institutional investors remain cautious about the mainland recovery

JPMorgan Chase asset management strategist Zhu Chaoping, based in Shanghai, commented on China's latest GDP and its impact on investment, stating that the latest economic data shows a stark contrast between a weak domestic economy and strong exports. The real GDP growth in the fourth quarter of last year slowed to 4.5% year-on-year (below the 4.8% in the third quarter of 2025), in line with market expectations. Nevertheless, the annual GDP growth still reached the government's target of 5%.

In addition, monthly consumption and fixed asset investment growth in the mainland have also slowed, reflecting the diminishing impact of consumption subsidies and the ongoing pressure on local government finances and the real estate market. In contrast, exports, especially in the high-end manufacturing sector, remain strong, providing a buffer against further economic slowdown.

Zhu Chaoping stated that despite the macroeconomic headwinds, the Chinese stock market remains resilient, primarily driven by leading companies in the global artificial intelligence (AI) trend. Policymakers seem more inclined to maintain a moderate and sustainable bull market, appearing cautious about introducing aggressive stimulus measures in the short term.

Zhu Chaoping pointed out that since China's economic growth reached a year-on-year increase of 5.4% in the first quarter of last year, it has been the third consecutive quarter of slowing growth. Although domestic demand has slowed, exports continue to maintain strong momentum. Despite a decline in exports to the United States after April, exports to Europe, ASEAN, and other emerging markets remained strong, driving a total export growth of 5.5% for the entire year, resulting in a trade surplus of USD 1.2 trillion. China's efficient supply chain, competitive costs, and leading position in advanced manufacturing have significantly boosted growth in high-tech products, electromechanical products, automobiles, and integrated circuits.

Moreover, as the subsidy effect fades and the high base effect emerges, domestic consumption growth began to slow after peaking in May. In December, industries such as automobiles, home appliances, and furniture experienced a decline. Investment growth also faces challenges, particularly in the real estate and infrastructure sectors, while "anti-involution" related policies have restricted investment in industries with overcapacity.

Zhu Chaoping also noted that the divergence of internal and external trends is reflected in the stock market. Sectors related to global demand, such as materials, information technology, and industrials, particularly those benefiting from overseas AI infrastructure investment, have outperformed the market. Within the information technology sector, sub-sectors such as optical communication modules, printed circuit boards (PCBs), and consumer electronics have performed outstandingly, especially for Chinese listed companies that have received a large number of overseas orders, with impressive stock price increases. Similarly, in the materials sector, metal raw materials, and in the industrial sector, power equipment and lithium batteries have also benefited from the surge in AI infrastructure demand.

However, Zhu Chaoping pointed out that recent communications with investors show that institutional investors remain cautious about domestic recovery and are more focused on the profit growth potential brought by the "going out" theme. As valuations in growth sectors rise, market interest in high-dividend stocks is increasing.

Zhu Chaoping stated that policymakers are positioning advanced manufacturing and technology as new growth engines, with the stock market playing a key role in supporting capital formation and household wealth allocation. Monetary policy continues to focus on targeted and structural measures rather than broad-based easing. The People's Bank of China prioritizes maintaining liquidity stability and providing support for specific industries, with expectations that these measures will continue this year and be adjusted moderately as needed Despite the ongoing external and industry-level risks, a balanced investment strategy that takes into account both growth and income opportunities may help in finding investment opportunities in the continuously evolving landscape