Adjustments in the housing market and overcapacity in the manufacturing sector continue to weigh on China’s economy, J.P. Morgan said Monday.
But the biggest risks come from a slowdown in real estate investment and weak demand in related sectors, the investment bank said in a report.
It maintained its 2014 forecast for gross domestic product growth at 7.2 percent.
The bank’s China Research Sentiment Index, a measure of business confidence, fell to 48.8 in May from 51.1 in April thanks to declining output and sales, slower orders and worsening inventories.
However, it said the economy will receive support from the export sector with an expected pickup in global demand, and benefit from recent pro-growth measures and a stable service sector.
Market sentiment for transportation, small caps, ports and the automotive sector will improve. Cement makers, power producers, healthcare, insurance, gaming and petrochemical plays will continue to experience weakness, it said.
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