The recent market rally has legs amid improvements in leading economic indicators and company earnings, a result of policy stimulus, Credit Suisse said in its 2020 outlook. China and Asian equity markets are best positioned to benefit from the trade war easing and New Orders index component of the PMIs for China, Korea and Taiwan, which tend to lead economic recovery reflected the optimism, the Swiss Bank said.
Earnings recovery in the world’s second-largest economy has compelled analysts to lift their 2020 earnings forecasts for Chinese companies by 12.7%. This underpins their expectation Chinese stock markets would outperform the global emerging market aggregate.
While predicting a sub-6% growth for China GDP which it says will expand by 5.9%, it added real estate would cushion the manufacturing slowdown. Chinese authorities would support property investment growth in 2020 and given the lower bond supply, easing policy risk, and a manageable refinancing pipeline Credit Suisse’s investment theme of the property sector could also be played via real estate bonds.
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