On November 19, Mark Mobius, the chief investment officer for Mainland China and Hong Kong at the China Asset Management Company, released the 2025 outlook for Chinese stock investments. It pointed out that, from a valuation perspective, Chinese stocks appear attractive, trading at relatively low levels compared to historical averages and other developed markets. In October, the MSCI China Index was discounted by about 52% compared to the MSCI USA Index. Considering the current market expectations, China is expected to have significant growth potential in 2025, and China Asset Management is optimistic about the development of Chinese stocks in the next 12 months. As company fundamentals improve, revenue is expected to rebound, and profit pressure that has existed for the past three years is expected to ease. This is likely to drive an increase in return on equity and upward revisions to profit forecasts, thereby enhancing investor confidence. This round of recovery is expected to receive continued stimulus support. Boosting investor confidence in China's domestic economic growth China has a vast domestic market, with the national savings rate reaching new highs in recent years. According to the International Monetary Fund, China's national savings as of March 2024 accounted for over 40% of the country's GDP. Policy measures announced in September aimed at restoring consumer confidence are crucial for boosting subdued consumer spending. China Asset Management believes that these measures, aimed at enhancing the stock market, property market, and overall economic growth, will ultimately boost investor and consumer confidence as well as employment security. With recent policy support, it is believed that domestic demand will recover in 2025. This will improve consumption and investment, creating a more resilient economic environment and ensuring stable future growth. It is important to note that the timing, scope, and appropriateness of implementing recent policies will affect the pace of economic recovery, as policy impacts typically take time to permeate the real economy. Expansion of Chinese companies overseas Many leading Chinese companies are aggressively expanding overseas. These companies leverage their economies of scale in the domestic market to gain cost advantages. China Asset Management identified this trend earlier, and expects to see more overseas activities and expansion in 2025. It is believed that Chinese companies will have increasing opportunities to participate in the development of new global supply chains. This trend will be particularly evident in companies in the e-commerce, online gaming, large household appliances, and industrial sectors. Companies in these sectors can leverage sustained local demand while gaining a larger share of the global market, ultimately benefiting shareholders. Chinese companies focusing on enhancing shareholder returns Another key trend expected in 2025, according to China Asset Management, is Chinese companies focusing on enhancing shareholder returns through active share buybacks and improving corporate governance. This trend may not only increase minority equity, but also signify a commitment to shareholder value. The market expects strong rebound in per-share dividends for Chinese stocks, with a projected growth of 16% in 2024, 6% in 2025, and 8% in 2026. This revival will be widespread, with over 35% of companies expected to declare higher dividends in 2024. Companies with stronger cash flow are more likely to achieve dividend growth and conduct share buybacks. China Asset Management believes that as these practices become more widespread, investor confidence will strengthen, and the Chinese stock market will attract more investment.