US stocks continue to hit new highs. The financial market is waiting to see if President-elect Donald Trump will deliver on his promises after taking office.
While Beijing is trying to stabilize growth and win more time and room for economic restructuring, investors should watch out if Trump is likely to put more pressure on China as part of his bargaining tactics in bilateral trade.
A number of key summits this year will shed more light on the market outlook.
Chinese President Xi Jinping will make a speech at the upcoming Davos World Economic Forum for the first time. He may stress political and economic stability, and highlight his reform agenda and yuan internationalization. That would draw more attention to China A shares.
In March, the EU summit will officially start the process for Britain to leave the eurozone. And US and Chinese leaders will meet at the BRICS summit and G20 summit later this year.
Hong Kong equities have staged a decent rebound since the beginning of the year but an uptrend is yet to be confirmed.
Among key factors, the end of yuan depreciation or the chance for A shares becoming part of the MSCI emerging markets index could trigger the start of a bullish trend.
For specific sectors, investors have turned more positive on Macau gaming stocks, as recent tightening measures have had limited impact on gaming revenue.
Macau’s gaming revenue is expected to increase 8 percent to HK$223.2 billion this year, according to Merrill Lynch.
The consumption theme is also likely to gain. Sportswear stocks such as Li Ning Co. (02331.HK) and ANTA Sports Products (02020.HK) or home appliance plays including Haier Electronics Group Co. (01169.HK), Skyworth Digital Holdings (00751.HK) and Hisense Kelon Electrical Holdings (00921.HK) are worth collecting on dips.
This article appeared in the Hong Kong Economic Journal on Jan. 10
Translation by Julie Zhu
[Chinese version 中文版]
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