23 Feb 2015

helen zhu

 

 

 

 

  

While the surge in A-shares in the last quarter of 2014 was not entirely unexpected, it was sharper and more dramatic than most people predicted. Helen's view is that the run up in the A-shares was driven not just by expectations of monetary easing and cyclical improvements but was, much more importantly, a reflection of the structural improvements which have taken place over the last year.

 

Going forward, Helen believes the China economy is definitely slowing down. The 2015 GDP target is likely to be set at 7% and Helen expects the final number to come in somewhere close to or slightly below that.

 

However, so long as the current leadership team in China remains firmly committed to reform and continues to build on a consistent track record of implementation, Helen believes we should have a reasonable foundation for a more sustainable bull market. There are, of course, still risks to this. If global demand collapses because of weakness in the developed world it would be likely policymakers would have to put reforms on pause and switch their focus to cyclically stabilising the economy. The property market remains another risk factor – the policymakers are making efforts to engineer a soft landing, but given the fragmented nature of this sector in terms of both demand (buyers) and supply (developers), top down control is more challenging than for some other areas of the economy.

 

 

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