Bank of America cautioned that China's recent equity market rally has outpaced the underlying macro fundamentals, with looming tariff risks set to test market resilience in April. According to the bank, while January-February activity growth indicators were better than expected, disappointing data on imports, inflation, and bank loans suggest that the rally may not be sustainable.
Key points from the analysis include:
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Macro Data Concerns:
Despite solid activity growth, weaker-than-expected import figures, rising inflation, and sluggish bank loan growth are casting doubt on the sustainability of the current market rally. -
Policy Uncertainty:
Although fiscal support remains in place following the National People's Congress, the clarity around the State Council's consumption policy action plan—rolled out on March 16—remains limited. This uncertainty is compounded by potential tariff risks, as U.S. President Donald Trump may impose additional tariffs on April 2. There's also concern that other countries could hike tariffs on Chinese imports to gain leverage with the U.S., further pressuring China's export sector. -
Economic Outlook:
BofA maintained its 2025 GDP growth forecast at 4.5%, but lowered its Q1-Q2 growth estimates by 10-20 basis points to account for the initial shock of the tariffs. This cautious stance reflects the growing disconnect between the robust rally in equities and the underlying economic challenges facing China.
Leveraging FMP APIs for Broader Market Analysis
To better understand the macro and sector-specific dynamics at play, investors can use the following Financial Modeling Prep APIs:
✅ Industry Classification API
This API helps you analyze how Chinese companies are positioned within the global industry landscape, providing insights into sector-specific fundamentals.
✅ ETF Sector Weighting API
Use this API to monitor how institutional investors are allocating assets among sectors, which can highlight shifts in sentiment towards Chinese equities relative to global markets.
Conclusion
BofA's warning underscores that while China's equity markets have rallied strongly, the underlying economic fundamentals remain fragile amid tariff uncertainties and mixed macroeconomic signals. Investors should remain cautious and consider using reliable data tools—such as the Industry Classification and ETF Sector Weighting APIs—to better gauge sector exposure and long-term risks in the Chinese market.
