China's manufacturing pivot fails to lift consumer confidence, Warakirri report says
FXI•Northcape Capital maintained a deep underweight position in China, citing weak consumer confidence and uncertain manufacturing profitability. Chinese equities fell 19% in the 12 months through September 30, 2026, while high-tech exports rose 40.7% to $723 billion in the first seven months of 2026.
1. China outlook remains cautious
Northcape Capital retained its deep underweight position in China in an October 22 analysis, citing weak consumer confidence and uncertain profitability in advanced manufacturing. Chinese equities returned -19% in the 12 months through September 30, 2026, compared with a 30% gain for MSCI EM. High-tech exports rose 40.7% to $723 billion in the first seven months of 2026, but Northcape said a shift toward consumption and services remained necessary to improve returns on capital and saw no imminent policy reset.
