Advertisement
Shanghai Stock Index
BusinessMarkets

China’s stock benchmark may climb 14 per cent to scale 2015 high as inflation, policy risks ease, Guotai Junan predicts

  • Shanghai Composite Index may climb to 4,000 points, a level not seen since the market meltdown in 2015, Guotai Junan says in May 23 report
  • East Money Information, Bank of Jiangsu and Beijing Oriental are among its top picks on potential market re-rating

Reading Time:2 minutes
Why you can trust SCMP
1
A man watches a large electronic screen showing the latest stock market data in Shanghai on May 10. Photo: EPA-EFE
Zhang Shidongin Shanghai
China’s key stock index will probably break out of sideways trading to scale a level not seen in six years as concerns about inflation and policy tightening risks ease, according to Guotai Junan Securities.
Advertisement

The Shanghai Composite Index may rise to 4,000, a level not seen since the market meltdown in 2015, analysts led by Chen Xianshun at the Shanghai-based brokerage wrote in a report dated May 23. The level implies a 14 per cent upside from Monday’s close, making it among the most bullish calls.

China’s economy may have seen the steepest decline in aggregate financing in April when volume shrank by 45 per cent to 1.85 trillion yuan, they said. Factory-gate prices, which surged 6.8 per cent in April, are likely to decelerate after May. Both improvements could underpin risk appetite and temper worries about central bank policy.

“The risk to risk-free interest rate is likely to be on the downside,” Chen said in the report. “Negative expectations about liquidity will need to be revised as current inflation expectations have already reflected the extreme relationship of supply and demand.”

Investors should buy mid-cap blue-chip stocks ahead of potential market re-rating, they added. East Money Information, Bank of Jiangsu and Beijing Oriental Yuhong Waterproof Technology are among its top recommendations.

Advertisement
loading
Advertisement