US-China phase one trade deal could boost A shares as earnings growth comes through, analysts say
- Easing of trade tensions should allow Beijing to move forward with further reforms, according to Swiss private bank Union Bancaire Privee
- HSBC: Hong Kong economy could benefit from trade truce
A phase one trade deal between the United States and China could be another positive for the latter’s A-share market this year, as earnings growth is expected to be strong in sectors ranging from the software industry to the financial sector, according to investment strategists and economists.
The truce in an 18-month fight between the world’s two biggest economies should ease some of the pressure on Beijing and allow China to move forward with a number of reforms, including addressing the stability of its financial system, Norman Villamin, chief investment officer for wealth management at Swiss private bank Union Bancaire Privee, said.
“We think the [phase one trade deal] is going to be very good for the A-share market in general, and that’s a place where we’re really focusing investors, in terms of allocating their money, in 2020,” Villamin said.
UBP is bullish on the biotechnology sector, which could benefit from the trade deal, he said.
Trump has aggressively used tariffs to force Beijing to change decades of industrial and trade policies, adding duties to about US$360 billion of Chinese-made goods. China has responded with its own tariffs on about US$110 billion of American goods, creating an environment of uncertainty that has caused companies to delay investment and attempt to shift portions of their supply chain out of mainland China. It has also weighed on global trade.