Outlook for China stocks brightens on capital flows, rebounding home prices

Chinese stocks are likely to continue the resilience they have shown since the war in the Middle East began, thanks to haven demand for yuan-linked assets, the green shoots of the property market and the inclusion of tech start-ups in key equity gauges, according to fund managers and investment banks.Optimism about Chinese equities was building after official data showed that home prices in the biggest mainland cities reversed declines and an inflationary trend took hold in March, said money managers including BNP Paribas Asset Management and Invesco. Meanwhile, the expected addition of more artificial intelligence companies, such as Knowledge Atlas and MiniMax, to Hong Kong’s benchmark index and tech gauge in June could draw more fresh capital, Morgan Stanley said.Recovery in the weak parts of China’s economy signals that the worst for the world’s second-largest economy is probably behind it, and the nation continues to benefit from innovative technology, AI adoption and strong global supply chains. Chinese assets have regained favour among overseas investors seeking hedges amid the US-Israel war on Iran over the past two months, driving gains in stocks and bonds simultaneously.