Consumption is expected to replace new energy as the favored sector for foreign capital in Chinese stock markets. Morgan Stanley estimates that by the end of 2023, China’s retail sales will grow by 25-30 percent from 2019. Nearly 60 percent of new stocks included in the latest Morgan Stanley International Capital Chinese Index are from consumption sectors like cinemas, healthcare and chain stores that sell daily goods. Goldman Sachs estimates that from 2020 to 2022, the level of excess savings in China will hit 3 trillion yuan (US$440b). Experts believe these savings will turn into consumption to enable growth. Foreign investments transacted through Hong Kong stock markets to A-share markets on the Chinese mainland hit 141.3 billion yuan (US$20.45b) in January, the highest value in a single month since 2014. They favored medium stocks with market capitalization between 20 billion (US$2.9b) to 50 billion yuan (US$7.3b). Some analysts attribute the rebound to China’s growth prospects and the A-Share market’s slower rebound than overseas markets.
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