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China: what are the top 10 questions in investors’ minds for 2017?

 

The essential

We have reviewed the top 10 questions about China. We think China’s PPI and private investment will peak later than the market expects, and that whether they remain positive is more important than when they will peak. Property investment will also peak later than the market expects, with minimal drag on the economy as a whole. In fact, overcapacity is the only thing holding the economy back, but fundamental demand resulting from economic stabilisation will continue to drive the rally in commodities.

 

Chinese monetary policy will not tighten, instead becoming much more aggressive in 2017. Capital outflows will not be as high as the market expects in Q1 2017. The market’s and the PBOC’s fears will abate when certain thresholds are breached. Investors should focus on the composition of Trump’s Congress rather than his tweets, particularly with respect to what it all means in terms of policy on China. We believe the domestic Chinese equity market will recover in 2017, and that the selloff in the Chinese bond market will not last. There might be upward pressure on the USD/CNY exchange rate in the coming months, followed by downward pressure later in the year.

CROSS ASSET (Download)

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January 2017

 

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Janvier 2017

 

The Article

L'Article

JI Mo , Amundi Hong Kong Chief Economist
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China: what are the top 10 questions in investors’ minds for 2017?
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