Tracking market sentiment over Chinese equities

China's economy has been a topic of interest lately, with recent data showing surprising strength, thanks to consumer subsidies and a rush of export shipments to beat tariffs. However, an impasse with President Donald Trump over the trade war has darkened its outlook and fueled calls for stimulus. To assess market sentiment over Chinese equities, CNBC Africa spoke with Tian Pan, Head of Strategy & Product at Prescient China. Pan highlighted the robust performance of China's economy in the first quarter, exceeding expectations with a 5.4 percent year-on-year GDP growth and impressive retail sales and export growth. However, the uncertainty introduced by Trump's tariff announcements has cast a shadow over future expectations. While market sentiment remains cautiously optimistic, the Chinese market is bracing for potential challenges as the trade war unfolds. Despite the looming uncertainty, earnings expectations for Chinese companies have not seen significant downgrades. Pan explained that most companies derive the majority of their earnings domestically from within China, insulating them from some international market impacts. As a result, overall earnings have continued to show growth, particularly in China's tech and domestic sectors. With the ongoing 'sell America' trade trend diverting investment away from US assets, the Chinese equity market is beginning to attract interest from global investors. As US valuations remain high and China's valuations stay comparatively low, slow inflows into the Chinese market are expected, especially amidst growing uncertainty in the US market. The recent rally in Chinese markets offers a glimmer of optimism after a prolonged bear market, signaling potential opportunities for investors. Despite reservations about China's market stability, Pan emphasized the country's long-term investment potential, driven by its massive economy and growth prospects. While the China-US trade talks have yet to yield significant progress, Pan noted that China's strategic preparation and policy responses have mitigated panic within the country, despite concerns about the economic impact of tariffs. As inflation concerns loom on the US side due to tariffs, China faces a different challenge with deflation, positioning the country differently in the trade standoff. While higher tariffs could support China's inflation target, consumer sentiment remains a concern for policymakers. In navigating the uncertainties of the market, Prescient China maintains a bullish outlook on Chinese assets, anticipating policy support and economic growth in the coming years. The firm emphasizes the importance of actively managing portfolios to minimize risks associated with tariff escalations and policy shifts, while seeking to capitalize on potential market opportunities.