China is likely to inject liquidity into the market in an attempt to create higher inflation, the Hong Kong Economic Journal reported Monday, citing Matthews Asia’s chief investment director, Robert J. Horrocks (何如克).
Such an injection could counteract the negative impacts to the stock market of deflationary pressure driven by monetary tightening in the United States.
About 25-33 percent of the firms’ clients’ portfolios is invested in stocks listed in mainland China with low cash level, Horrocks said.
Matthews is likely to underweight stocks in other Asia-Pacific markets, with a view to adding more holdings of mainland- and Hong Kong-listed stocks, he said.
Consumer plays with higher expected growth — including food and beverages, healthcare, telecommunications and online retailing — are the firm’s top picks.
Horrocks expects an improved economy in China next year, with corporate returns on equity likely to stablize for the rest of this year.
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