HSBC-backed fund Jintrust tips Chinese stock rebound to continue
Benchmark Shanghai Composite Index has rebounded 3pc over the past two days after sliding to its lowest level in 28 months
Chinese stocks are being tipped by a leading fund management firm backed by HSBC Holdings to rebound in July, as the impact of the escalating trade friction with the US subsides and eased domestic monetary policies bolster sentiment.
With US$34 billion worth of tariffs already implemented and a potential US$16 billion more on the way, HSBC Jintrust Fund Management – a Shanghai-based money manager with the UK lender as the shareholder – is suggesting the knock-on will lower China’s economic growth by just 0.1 of a percentage points.
But expectations about loosening liquidity after a third cut in banks’ reserve requirement ratios this year will more than compensate, by boosting investor risk appetite
The valuation of the A-share market has already dropped to a relatively low level after a significant decline. As the panic subsides, the market is in for a rebound
“The valuation of the A-share market has already dropped to a relatively low level after a significant decline,” the firm said in its monthly market report, referring to yuan-traded stocks on the mainland’s exchanges. “As the panic subsides, the market is in for a rebound.”
HSBC Jintrust has 26.6 billion yuan (US$4.03 billion) of assets under management.
The rally in Chinese equities started right after US President Donald Trump' administration announced the US$34 billion duties on Chinese goods will take effect on Friday, as dip buyers came in on the bet that there would be a reprieve of the trade spat between the world’s two largest economies.
The benchmark Shanghai Composite Index has rebounded 3 per cent over the past two days after sliding to its lowest level in 28 months.