What China’s reopening tells us about the future of British stocks

Pent up demand: car sales rebound

Not all consumer spending has been slow to recover. Rob Marshall-Lee, of BNY Mellon Investment Management, said April’s easing of lockdown restrictions has led to a rapid rebound in some types of consumption.   

“Speaking to many Chinese companies, some are pretty much back to normal. Nike’s Chinese stores have all been open for weeks and Dutch company ASML’s semiconductor equipment supply chains have also been working well after initial constraints,” he said.  

Demand for products such as cosmetics seem to have rebounded strongly on pent up demand and car sales have also shown a sharp V-shaped recovery, he noted.   

“Cars are only down by 3pc year-on-year in April versus -82pc in February, so effectively back to normal within 2 months,” he said.  

Andy Rothman, of investment manager Matthews Asia, noted that the recovery of car sales reflects the fact that middle class and wealthy consumers have both sufficient money and enough confidence in the future to spend it.

Mr Marshall-Lee said this may well be indicative of what to expect in Britain, depending on how quickly lockdown restrictions ease and the extent of the economic downturn on consumer incomes, jobs and confidence in the future.

Yet Mr Forster cautioned that official Chinese data is notoriously unreliable and Chinese society was very different to Britain. As such, direct comparisons must be taken with a pinch of salt, he said. 

Source Article