Chinese stocks to carry momentum into 2021 on growth and vaccine outlook, brokerages predict

Citic Securities, CICC and Huaxi Securities make bullish calls on Chinese stocks in 2021, citing economic recovery and progress on Covid-19 vaccines

Huaxi Securities and Pacific Securities predict that the Shanghai Composite Index will rise to 3,800, a 14 per cent gain from the current level

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The consensus among brokerages and investment banks is that Chinese equities are likely to continue their stellar run next year. Photo: Xinhua

Zhang Shidongin ShanghaiandMartin Choiin Hong Kong

Published: 10:00am, 19 Nov 2020Updated: 10:00am, 19 Nov 2020

The prospects for Chinese equities look bright and they are likely to continue rising until the middle of next year on the back of the economic recovery and the likelihood of vaccines for Covid-19, according to forecasts by brokerages.

At least five mainland brokerages including Citic Securities, China International Capital Corp (CICC) and Huaxi Securities have made the bullish calls, as investment banks start releasing their outlook for 2021.

“The market will be in for a slow and rotating bull run-up from the year end to the second quarter next year,” said Qin Peijing, a Beijing-based analyst at Citic Securities, China’s biggest publicly traded brokerage. “China’s recovery is secure and good expectations about the economies overseas will strengthen on the progress on the vaccines.”

Huaxi Securities and Pacific Securities have also predicted that the benchmark Shanghai Composite Index will rise to as high as 3,800 next year. That implies a 14 per cent gain from the measure’s last close.

CICC is among several mainland brokerages that are bullish on Chinese equities. Photo: qq.com

The index has risen 9.7 per cent so far this year, making it among the best performing major markets globally. The boost has come after China’s economy emerged from the biggest contraction on record after the successful containment of the coronavirus pandemic and the release of a record amount of liquidity to bolster growth.