Plenum unlikely to come up with plans to boost stock market

October 28, 2015 12:04
More state-owned enterprises are expected to consolidate after the fifth plenary session of the 18th CPC Central Committee. Photo: Xinhua

The ongoing fifth plenary session of the 18th Central Committee of the Communist Party of China is unlikely to come up with any plan that could boost the short-term performance of the country's stock market, UBS Securities said.

The plenum will focus on the 13th Five-Year Plan while the renminbi's depreciation and the economic slowdown continue to dampen market sentiment, the Hong Kong Economic Journal quote H-share strategist Lu Wenjie (陸文傑) as saying in a teleconference.

Nonetheless, H shares are trading at a forward price-to-earnings ratio of 9.5 times, Lu said.

In contrast, A shares face downside risks as certain sectors are overvalued.

The investment bank forecast that the country will lower its economic growth targets, with a budget of 4.3 trillion yuan (US$676.1 billion) for railway investment during the five-year period, mainly for city rails. 

More state-owned enterprises are expected to consolidate, particularly in the ports and shipping sectors, to facilitate the country's "one belt, one road" strategy, while telecommunications and energy sectors are likely to remain monopolistic.

[Chinese version中文版]

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Hong Kong Economic Journal