China: Ramped up stimulus and Shanghai Connect to power equities

China will likely ratchet up the stimulus further, and alongside this week's launch of the Shanghai-Hong Kong Connect programme, Chinese equities could speed ahead, explains ETF Securities' Nitesh Shah.

Chinese equity performance has faltered in recent weeks, with the MSCI China A-Share index weighed down by disappointing economic data releases. Falling property prices and slower GDP, fixed asset investment, and retail sales growth, underlie the recent gloom in the equity market. Optimism was also dented in October by delays to the highly anticipated Hong Kong-Shanghai Connect initiative, which offers foreign investors access to the Chinese domestic stock market and finally opened this week. Downward spiral? A loss of confidence could set in motion a negative self-fulfilling sp...