Hong Kong — J.P. Morgan is optimistic regarding the Chinese equity markets in the following year. Pro-development measures aimed at advancing the Chinese economy have created a market-friendly climate that favors equity investments.
In a report published today, Asian Year Ahead 2015 – Stock Ideas for the Year of the Goat, J.P. Morgan expects policy direction and cheap valuations to be dominant themes in the Chinese equity market. “You can think of it as QE with Chinese characteristics,” said Adrian Mowat, Chief Asian and Emerging Market Equity Strategist, and co-author of the report, adding that the declining real estate market and the launch of the Shanghai-Hong Kong Stock Connect scheme (SH-HK Stock Connect) will act as a catalyst in directing investment into the equity market.
“The J.P. Morgan Greater China Economic Research team predicts two RRR cuts in 2015. RRR cuts are likely to have the biggest market impact. Many A-share investors may be positioning ahead of the easing to reallocate away from a declining real estate market. The launch of the SH-HK Stock Connect platform enables more international investors to access A-shares,” said Mowat.