Chinese stocks face sideways September amid US Fed and oil pressures
A top fund manager predicts China's markets will trade rangebound in September due to US Federal Reserve tightening expectations and rising oil costs.
China Asset Management, the nation's second-largest mutual fund firm managing 2.2 trillion yuan, forecast that Chinese stocks will trade sideways throughout September. Despite double-digit profit growth for mainland companies in the first half of the year, this earnings cushion is insufficient to counterhead external headwinds. The money manager stated that a hawkish tone from the US Federal Reserve and elevated oil prices are likely to cap equity gains. Additionally, a faster pace of initial public offerings in the third quarter is expected to squeeze market liquidity. The firm advised investors to navigate this rangebound environment by buying on dips rather than chasing rallies. Chinese equities recently recovered from a sharp sell-off in July that heavily impacted technology firms, with the Star Market 50 index gaining three percent in August after plunging twenty-six percent the previous month. However, markets weakened as they approached September, drawing near July lows following signals from Fed Chair Kevin Warsh that curbing inflation remains the central bank's top priority.
