This Chinese brokerage just made the boldest call yet for the world’s hottest equities
- China Great Wall Securities says Shanghai Composite may well soar above 4,000 this year
- The index is just over 3,100 now – and is the best performing major market in the world
China Great Wall Securities just made the most bullish call yet about the world’s hottest stock market.
The Shenzhen-based securities firm said in a report that China’s benchmark Shanghai Composite Index will probably rise to 4,000 within the year, a target far exceeding those by global investment banks such as Morgan Stanley.
If the projection materialises, the Shanghai Composite would have reclaimed the ground it has lost since the 2015 market crash. It would be a 29 per cent jump from the index’s latest close.
Credit loosening, higher-than-expected tax reductions and decreasing mortgage rates were cited by Great Wall Securities as factors that will sustained the rally.
“The Shanghai Composite Index has the possibility of breaching 4,000 points,” said Wang Yi, an analyst at the brokerage. “The risk appetite continues to recover and the market will progress to a new stage after consolidation.”
The gauge had a choppy session on Thursday before ending almost unchanged at 3,106.42 at the close. It has surged 25 per cent this year as the world’s best-performing equity market, though technical indicators are already elevated to high-flying levels that signal selling pressure is building up.
Morgan Stanley last week raised the year-end target of China’s CSI 300 Index of big-caps to 4,300, representing a 13 per cent gain from the gauge, while UBS Group estimated the gauge to rise to 3,800.
Bocom International Holdings’ Hong Hao, who correctly predicted the burst of stocks bubbles in 2015, said in November the Shanghai Composite would trade as high as 2,900 this year.
Still, Great Wall Securities said gains on Chinese stocks will probably slow down for the rest of year, with the pace of the run-up steadying. The market may be in for a shake-out in April, as investor may sell after the release of poor first-quarter economic data and corporate earnings results, it said.
The brokerage recommends growth companies engaged in computer, defence, electronics and telecommunication industries.
Great Wall Securities, which was founded in 1995, has 109 brokerage outlets across the country and about 3,000 employees, according to its website. It also has stakes in two domestic fund management firms, including a venture with Invesco. Its biggest shareholder is Huaneng Capital Services, a unit of state-owned power producer China Huaneng Group. Its stock surged by the 10 per cent daily limit to 17.44 yuan in Shenzhen on Thursday.
