Important Links

Chinese economy's Improving Fundamentals Could Drive Further Upside in 2019

23 April 2019Economics
Chinese economy's Improving Fundamentals Could Drive Further Upside in 2019 - Market Insights by Citibank UK

While the rally so far has been mainly driven by policy easing, sentiment recovery and valuation re-rating, Citi analysts expect further upside to be driven more by fundamentals and earnings growth.

Earnings growth could accelerate after 1H19E: While earnings growth could remain subdued in 1H19E given a high base last year, Citi analysts expect a visible acceleration going into 2H19E. Citi analysts forecast MSCI China earnings growth to reach 13% yoy in 2019, and further accelerate to 16% in 2020E on growth recovery in the new-economy sectors, especially the Internet names. While the market rally so far this year has been mainly driven by policy easing, sentiment recovery and valuation re-rating, further equity market upside is could be driven more by fundamentals and earnings growth. Citi analysts overweight Internet, Consumers (non-Auto), Non-bank Financials and selected Capital Goods.

MSCI China earnings growth projection - Market Insights by Citibank UK

Past performance is no guarantee of future results, real results may vary. Forecasts are expressions of opinion, are not a guarantee of future results and are subject to change.

Delayed MSCI indexes transition does not affect A-share inclusions: MSCI recently announced a delay in the transition of the MSCI All China Indexes to the MSCI China All Shares Indexes to November 26, 2019 from the previously planned June 1. The transition helps align the index methodology to be fully governed by the MSCI GIMI framework, which is consistent with further A-share inclusion in the future. The delay follows feedback from market participants, in order to provide additional time for smooth implementation. Citi analysts believe the delayed transition is unlikely to affect the A-share inclusion process and the three-step inclusion may kick off as planned starting from May this year.

Our recent research

Fed's Greenlight for EM Central Bank Easing

Fed's recent rate cut has opened doors for Emerging Market (EM) central banks to do the same, without having to worry about FX instability and capital outflows.

Find out more

EconomicsPoliticsEmerging Markets

Trade Tensions Escalate as Trump Raises Tariff Threat Again

Citi analysts expect Trump’s threatened 10% tariffs on US$300bn of Chinese imports to come into effect, with scope for tensions to further escalate.

Find out more

EconomicsPoliticsUSEmerging Markets

Volatility in Sight as Yuan Breaches Key 7 Level

USDCNY spot onshore pushed past 7 this morning following the USDCNY 9.15am fixing that was allowed beyond 6.90, a level that was held so far this year. 7.00 is a key psychological level and a breach is likely to raise anxiety over further complicating US-China talks and weighing on broader risk appetite.

Find out more

Currencies

Take the first steps to your wealth management planning with Citi

Speak to a Relationship Manager
0207 500 1992

Already with Citi? Contact your relationship manager or view product availability on Citi Online

Why choose Citi

A relationship - not just a bank account

A dedicated Relationship Manager giving you access to our internal team of product experts and all our benefits

Access to exclusive Citi products

A range of current and investment products available both on shore and offshore, in the currency of your choice
Multi-currency accounts
Investment products

Global services for a global lifestyle

Our team is here to support you getting started in UK or with International travel and relocation
Moving to and from the UK
Travelling overseas

Offshore investments

We offer a diverse range of banking and investment services, including for those who want access to offshore investments

Find out more

Just moved to the UK?

We can save you time money and hassle. If you are a foreign national in the UK, Citi's International Banking Service can help you manage your money, home and away.

Find out more

Investment products are not insured by any governmental agencies, are not bank deposits, and are neither obligations of, nor guaranteed by, Citigroup, or any of its affiliates, unless otherwise stated. Investment products are subject to investment risks, including possible loss of some or all of the principal amount invested. Past performance is not indicative of future results, investments can go down as well as up.

“Citi analysts” refers to investment professionals within Citi Research (“CR”), Citi Global Markets Inc. (“CGMI”) and voting members of the Citi Global Investment Committee. Citibank N.A. and its affiliates / subsidiaries provide no independent research or analysis in the substance or preparation of this document. The information on this page has been obtained from reports issued by CGMI. Such information is based on sources CGMI believes to be reliable. CGMI, however, does not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute CGMI’s judgment as of the date of this page and are subject to change without notice. This page is for general information purposes only and is not intended as a recommendation or an offer or solicitation for the purchase or sale of any security or currency. No part of this page may be reproduced in any manner without the written consent of Citibank N.A. Information on this page has been prepared without taking account of the objectives, financial situation, or needs of any particular investor. Any person considering an investment should consider the appropriateness of the investment having regard to their objectives, financial situation, or needs, and should seek independent advice on the suitability or otherwise of a particular investment. Citi Research (CR) is a division of Citigroup Global Markets Inc. (the "Firm"), which does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this information. Investors should consider this information as only a single factor in making their investment decision.

Opinions expressed herein may differ from the opinions expressed by other businesses or affiliates of Citigroup, Inc., and are not intended to be a forecast of future events, a guarantee of future results or investment advice, and are subject to change based on market and other conditions.