(Bloomberg) -- The MSCI China Index may jump by more than 10% in 2024, underpinned by signs of a domestic economic recovery and more policy support, said Invesco Ltd.’s chief investment officer for Hong Kong and China.

“I would expect to see double-digit growth. If it’s about 10%, that should give the market confidence,” said Raymond Ma in his first media interview since becoming CIO in April. The gains will be driven by an improving earnings trajectory on the back of a reviving economy, though a valuation re-rating won’t be easy, he said.

The bullish forecast comes as Wall Street banks have dialed back their expectations for Chinese stocks in 2024 after another dismal year where the MSCI China Index lost more than 14%, lagging global peers. The nation’s ongoing property crisis, weak household demand and deflationary risks continue to weigh on shares, despite the gauge trading at a valuation below its five-year average.

To Ma, while many investors are still looking for reasons to sell, any negative sentiment should be at its “late stage.” Investors should gain more conviction in the nation’s recovery by the second quarter of next year.

Ma sees some upside in recent economic readings. He points to a slight year-on-year increase in exports for November, the first since April, along with private survey data showing an unexpected expansion in factory activity. The country is also widely expected to hit an official growth goal of around 5% for 2023.

“They were kind of positive signals ignored by market,” he said. “But if month-on-month they continue to present themselves in positive territory, I think the next two quarters we are going to see some interesting change.”

There are still plenty of concerns about the economy’s outlook into 2024, though. The recovery lost momentum in November, with analyst saying both the industrial output and retail sales weakened when compared to more typical periods, putting more pressure on Beijing to roll out supportive policies to juice growth.

Ma expects more efforts like the relaxation of homebuying curbs in Beijing and Shanghai to come, but remains focused on companies that are gaining market share globally or connected to tackling climate change, such as those along the EV supply chain. 

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“Re-globalization, greenization and the electrification revolution will play big” in the next decade, said Ma, who’s invested around half of his portfolio in companies tied to these trends. “We like companies that can be competitive overseas, either through exports or having their production overseas.”

Ma joined the US asset manager in 2023 and oversees portfolios including the Invesco PRC Equity Fund, which counts Alibaba Group Holding Ltd, PDD Holdings Inc and BYD Co Ltd among its top ten holdings. Prior to Invesco, he spent 15 years at Fidelity International in Hong Kong, where he served as a portfolio manager.

--With assistance from Jill Disis.

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