Downbeat UBS warns mainland stocks to slow Q4, in line with economy and as surveillance of financial markets tightens
On the positive, the Swiss bank tips companies with solid fundamentals such as financials, and food and drink firms, to outperform over the rest of the year
Swiss banking group UBS has warned Chinese stocks may hit the buffers in the fourth quarter as growth in the world’s second-largest economy slows and regulators tighten their scrutiny of financial markets.
It added that the A-share market could be set for consolidation after major benchmarks of big-cap shares climbed at least 18 per cent this year.
Gao Ting, the bank’s Shanghai-based head of China strategy, also cautioned that investors have been are too optimistic about Hong Kong-listed Chinese property shares – the leading gainers on the Hang Seng Index over the past year – and that they now risk falling amid weaker home sales.
China’s economic expansion decelerated to 6.8 per cent in the third quarter from 6.9 per cent from the previous three-month period, and housing sales also weakened after policymakers imposed buying restrictions in major cities to rein in red-hot prices.
At two separate briefings of the ongoing party congress in Beijing on Thursday, central bank governor Zhou Xiaochuan stressed the importance of maintaining stability of the financial system, and chief of the banking regulator Guo Shuqing promised financial supervision will get tougher.