China’s A-share market is expected to rise by 20 to 30 percent next year, with the Shanghai composite index reaching 3,200 from around 2,680 at present, Guotai Junan Securities predicted on Monday.
“The risk-free return rate of the whole market is declining, and this is a favorable factor for asset prices,” said Zhao Xianghuai, the company’s chief analyst for the non-banking sector.
He also expects further cuts in the interest rate and reserve requirement ratio, which will further push down the risk-free rate of return and spur investors to invest in capital markets.
Stocks of security firms will be among the top picks in the A-share market, Zhao said, noting that the sector is likely to expand by more than 40 percent.
Regulators are set to relax the rules on brokerages while pursuing the reform of state-owned enterprises. The rapid development of internet finance will also drive the non-banking sector, he said.
The analyst is also upbeat about the insurance sector, as more people will reduce the proportion of bank deposits and property investment in their portfolios and invest in equities and insurance.
Meanwhile, Hou Like, chief analyst for the property sector, said he is positive about the mainland real estate sector in the coming year.
Mainland property firms are expected to see a 5 percent growth in salable areas in 2015, while investment in the sector will rise by 8 percent, compared with 12 percent this year.
Construction starts will be almost the same as this year, he added.
“We can see that this year local governments have gradually canceled home-buying restrictions … the government has slowly changed from policy control to a market control approach,” Hou said.
The market is likely to see better liquidity as a result of the cuts in interest rates and reserve requirement ratio, and this will help restore the valuation of the property sector, he said.
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