China’s stocks have underperformed this year as questions linger on durability of economic rebound
2 min
One mystery in global markets this year is that while China’s economy appears to be rebounding strongly, its stock market hasn’t been doing as well.
The MSCI China index has risen only 1.8% so far this year, underperforming many of the major markets. The S&P 500 index, for example, has gained 7.7%. Stocks listed in Shanghai and Shenzhen have done a bit better—the CSI 300 index has gone up 4.9% in 2023. That seems to be in contrast to the rebounding economy, after China scrapped its strict “zero-Covid” pandemic restrictions in December and scaled back its regulatory crackdown on its technology companies.
China’s gross domestic product grew 4.5% from a year earlier in the first quarter and, more significantly, consumption has also come back strongly: retail sales jumped more than 10% in March from a year earlier. Crowds were everywhere in Chinese scenic spots in the recent five-day “Golden Week” holiday. Total domestic trips during the holiday rose 19% from the same period in 2019, according to official figures. Tourism revenue also recovered to pre pandemic levels.
Of course, the rally in Chinese stocks late last year already priced in a big part of the recovery. The MSCI China index surged 34% in the last two months in 2022, after rumours of reopening started to circulate.
Yet earnings growth so far has been disappointing. For nearly 80% of Chinese listed companies that have reported their first-quarter results, profits only grew an average 1% year on year, with around 69% of them having missed consensus earnings estimates, according to Goldman Sachs. About 77% of A-share shares—companies listed in Shanghai and Shenzhen—revised down their earnings guidance for 2023, according to Bank of America.
Earnings growth will likely improve ahead, especially against a lower base last year, when lockdowns across the country battered the economy. The struggling housing sector also seems to have stabilised. But a big question that remains is how long the consumption bounce could last. The export sector may suffer with a potential recession looming in the U.S. and Europe. China’s job market, especially for younger workers, is still quite weak. That partly explains why investors have jumped back into shares of state-owned enterprises—a more stable choice in an uncertain time.
Chinese stocks have rebounded substantially from their lows last year, but are still way off their peaks in early 2021, when China appeared to have avoided the worst of the pandemic. A more sustained market recovery would require a more broad-based revival of earnings growth.
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The imposing stone structures, with towers, turrets and a hot tub room, lord over the landscape near the mountain resort town of Sandpoint.
2 min
Idaho is not a place that’s often associated with Medieval castles, but a pair have just hit the market for $6.25 million.
The imposing stone structures have towers, turrets, ramparts, arrow-slit windows and even a drawbridge, and might just be the most authentic-looking castles this side of the Atlantic.
“Who expects to see a castle like this in Idaho?” said listing agent Brenda Burk of Coldwell Banker Schneidmiller Realty, who brought the property to the market last week. They are, she said, “extremely unusual.”
Schweitzer Castle and Château de Melusine, as they’re known, stand within Schweitzer Mountain Resort in the Selkirk Mountains and overlook the nearby mountain resort town of Sandpoint. They take in panoramic views of Lake Pend Oreille, Idaho’s largest lake.
The pair of ski-in/ski-out homes each have three bedrooms, two bathrooms and three stories, Burk explained. They are “so authentic,” she said. “Every single stone was handlaid.”
Schweitzer Castle, she said, wasn’t built for “functionality,” but has been modernized and adapted and now has everything a 21st-century residence requires, along with a dungeon, which for some buyers may also be a requisite.
The chateau, meanwhile, has a hot tub room with mountain views, as well as a garage.
The property is being sold furnished, and will come complete with the hand-carved statues, armor, mounted swords, stained-glass windows and a host of antiques dating to the 15th and 16th centuries.
The owner, an antique collector who couldn’t be reached for comment, “is always looking for that hidden jewel and he found that here,” Burk said.
The next custodian is likely to stem from a varied pool of buyers, Burk said, that would include “the trophy-home buyer, someone who can say ‘I own a castle.’”
The property could also appeal to someone looking for a vacation home, or a multi-generational estate, and beyond that “there’s the dreamers,” she said. “We definitely try to market to people who like Medieval history or maybe do Renaissance fairs.”
The seller “really wants it to go to someone with the same passion.”
