Hopeful year for Chinese stocks, yuan
Print Edition
CHINESE stocks are set to rise this year and the yuan will be relatively strong as the government continues with monetary policies to support economic growth, Standard Chartered said in a report yesterday.
The overall valuation of Chinese mainland stocks may rise as the Shanghai-Hong Kong Stock Connect program draws funds to the market and share prices may get a boost from ebbing risks in the economy, the bank’s wealth-management group said in its 2015 outlook which raised its investment rating on Chinese equities to overweight.
“While we expect growth to slow marginally in 2015, we believe the reforms implemented by the government so far have already materially reduced the risks of a hard landing due to a disruptive default in either local government investment vehicles or wealth-management product areas,” the report said.
“This warrants a reduced risk premium on Chinese equities, in our opinion.”
China’s stock market was the best performer globally in 2014 as the Shanghai Composite Index surged around 50 percent last year.
Zheng Yudong, head of investment strategy and advisory services of the bank’s wealth-management group in China, said the gains may be sustained as central bank policy becomes easier while corporate earnings are likely to be supported by lower energy prices, easing monetary conditions and domestic interest rates.
Standard Chartered predicts the yuan to remain stable against the strengthening US dollar this year and appreciate against other currencies such as the euro and yen as China continues to commit to foreign exchange and economic reforms.
The report said it expects the world economy to keep growing, led by an accelerating US.
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