Skip to content

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved.

Macro Intelligence: China's ambitious growth targets and the implications for Aussie investors

Explore China's 2024 growth ambitions and uncover how Australian investors can navigate the shifting landscape for opportunities in mining, renewable energy, and consumer goods.

Video poster image

Article by Juliette Saly (ausbiz)

Spotlight on China

In this week’s edition of IG Macro Intelligence, we take a look at the economic climate in China and implications for Aussie investors.

Ambitious target?

China has set a growth target for 2024 of “around 5%”, which many analysts say is ambitious.

It’s the same target as was set in 2023 and is being seen as in the upper end of what is achievable given a raft of economic headwinds including deflation, the troubled property sector, and a downturn in both business and consumer confidence.

China's economic challenges

Chinese Premier Li Qiang has admitted achieving the target “will not be easy”, adding the government will assist through prudent measures and targeted fiscal policy.

The International Monetary Fund predicts China will grow at a more modest 4.6% this year, declining towards 3.5% growth by 2028.

China's growth target

Source: Bloomberg

A tale of two markets: China vs. Wall Street

James Thom from abrdn told ausbiz recently that China has a tendency to “overshoot” its economic targets. But he remains constructive on investing in China as companies continue to deliver robust growth. China’s stock market has fallen around 11% over the past year, compared to gains on Wall Street’s S&P 500 of around 33%.

There has been some stabilisation in the past month, as state-funds or the so-called “national team” have bought up shares since the Lunar New Year holiday.

China’s stock market 11% decrease

Source: Google

Government interventions to stabilise the market

Chinese leaders have been actively trying to stem the stock market rout which risks triggering social and economic instability. Beijing has also replaced its Chief market regulator and introduced wider trading curbs in an effort to bolster confidence.

Despite the challenges, most fund managers say China is too big to ignore.

David Sokusky from Carrara Capital told ausbiz a lot of negativity has been overdone. He says while it’s certainly not “boom time” right now, things are not as dire as what has been priced in the equity market.

And abrdn’s James Thom likes the renewable energy sectors which he says are aligned with government policy to reduce emissions, as well as healthcare and consumer-related stocks. abrdn is also exposed to electric vehicles through the supply chain, with Thom calling it an “exciting sector”.

Beyond the Great Wall: Aussie investors' gateway to China

There are a number of ways to “play” the China story on the ASX, including mining stocks, food companies like a2 Milk, and travel firms such as Qantas and Helloworld.

UBS has identified 35 “China plays” which includes the above, as well as Graincorp, Treasury Wine Estates, Flight Centre, and Brambles.

Riding the dragon

Let’s start with a2 Milk. The company, which produces and sells A1 protein-free milk and related products like infant formula, is dual listed on the ASX and New Zealand stock exchange.

The stock is up 38% YTD and most analysts are bullish on its outlook. The auspicious “Year of the Dragon” is expected to boost fertility rates in China, which marketing expert Chris Flahey says could further boost sales of a2 Milk products, according to the AFR

Ord Minnett has a target price of $7.40 on the stock, suggesting a 26% upside.

a2 Milk daily chart

Source: IG

FNArena sentiment indicator

Source: FNArena

Tariff tides turning: what it means for Australian exports

Shares in Treasury Wine Estates were hit when China imposed tariffs on a number of Australian goods, including wine. It’s expected Beijing will fully remove those tariffs by the end of March, which analysts say is positive for TWE. UBS cites potential positive newsflow around the tariffs as a reason it has a BUY recommendation on the stock, with a PT of $14 which implies a near 14% upside.

Treasury Wine Estate weekly chart

Source: IG

FNArena sentiment indicator

Source: FNArena

Iron ore and beyond

Meanwhile, shares in iron ore producer Fortescue Metals Group are down nearly 16% so far in 2024 as iron ore prices fall amid bulging inventories. At its recent National People’s Congress, China’s leaders once again indicated property is for living in, not speculative investment, sending the price of the steel-making metal lower.

Most analysts are bearish on the outlook for FMG, which hit a record earlier this year.

Fortescue daily chart

Source: IG

FNArena sentiment indicator

Source: FNArena

Travel and trade: reviving the Aussie-China tourism economy

Then, of course, there’s the travel sector. The number of Chinese tourists visiting Australia remains well down on pre-pandemic levels, with Oxford Economics signalling a full recovery may not return until 2025-26.

Still, package deal companies like Helloworld are expected to benefit from any tourist influx. Shaw and Partners cites the removal of travel restrictions as positive for the company, and has a PT of $3.80, suggesting a 35% upside from its current share price.

Helloworld daily chart

Source: IG

FNArena sentiment indicator

Source: FNArena

This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Start trading forex today

Trade the largest and most volatile financial market in the world.

  • Spreads start at just 0.6 points on EUR/USD
  • Analyse market movements with our essential selection of charts
  • Speculate from a range of platforms, including on mobile

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.