How Bank of America sees the China trade unfolding in 2025

Bank of America writes about its China outlook for the year ahead and says:

“We advise investors to stay vigilant, start defensive (high yield value) in early 2025, and add quality beta on major corrections and/or strong stimulus. If credit growth accelerates notably in 1Q25, China market could potentially see a more sustained rally in 2H25, in anticipation of the fundamental recovery in 2026.”

They note that China’s equities (MSCI Index) had a solid performance last year, gaining 16% in USD terms after a 50% decline over the prior three years. They note that the index’s forward P/E valuation recovered from 8x to 10x during 2024, still below its long-term average of 12x.

A key signpost they’re looking for is for credit growth to rise by 1 percentage point to 9%.

” Acceleration in credit growth is a key thing to watch in 1Q25,” they write.

In terms of sectors, they like media and online retail (BABA) along with autos, IT hardware and semis.

This article was written by Adam Button at www.forexlive.com.