According to KraneShares' CIO, what is hindering China's stock market recovery?

The slow recovery of China's post-Covid economy could negatively impact its stock market in the long run.

Government stimulus is necessary to kick-start the country's stock market performance, according to Brendan Ahern, Chief Investment Officer of KraneShares, given the negative performance of the two largest indexes, the and the, in 2024.

"The government needs to provide much stronger fiscal support to investors, especially in mainland China, according to market experts," said the source on CNBC's "ETF Edge" this week. "So far, we have not seen the necessary support."

The National Bureau of Statistics' most recent read revealed that Chinese households are still hesitant to spend at pre-pandemic levels, despite consumer goods retail sales slightly contracting in June.

The household's balance sheet has been negatively impacted by both the scar tissue and the real estate crisis in China, according to him.

Ahern suggests that the post-earnings plunge in this week is indicative of China's consumer pullback, as the Temu parent company has overemphasized growth amid a broader spending slump and intense e-commerce competition.

""The company's hypergrowth and slight miss led to a big, big drop," he said."

To stimulate China's tech sector, Ahern suggested a top-down economic recovery approach.

He stated that policy amplification is necessary for investors to return to the space.