2019 Outlook: Chinese equities

What is in store for Chinese equities in 2019?

Dec 10, 2018 | Mike Shiao

Key takeaways

  • We believe Chinese equities represent some of the best structural opportunities across global markets.
  • Following the correction in 2018, we believe the risk-reward picture has turned exceptionally favorable.
  • We believe corporate fundamentals will remain strong given solid support from the domestic market.

There has been a disconnect between sentiment and fundamentals when it comes to Chinese equities in 2018. Market sentiment has been weak (driven by the changing relationship with the US and moderating growth), while economic fundmentals remained decent. China was on track to deliver its growth target despite moderation, widely known as a result of economic transitioning towards high quality growth.

Looking into 2019, our view on Chinese equities remains the same: We believe they represent some of the best structural opportunities across global markets, and the risk-reward is attractive now given:

  • Economic growth that’s expected to remain stable on the back of strong consumption.
  • A solid and competitive domestic market to strengthen corporate fundamentals.
  • Appealing valuation trading at close to a 10-year low.

 

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