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Dec 16,2019
Economic Acumen
CEBI Research

China’s November economic indicators embracing modest growth


China’s major economic indicators embedded into a stable trend in November, with industrial production and retail sales rebounding in vary degrees and fixed asset investment (FAI) maintaining a stable growth.
Even though the U.S. and China reached phase-one trade agreement, the economic uncertainties driven by the global cyclical slowdown and unresolved trade disputes will continue to cloud the growth outlook of China’s economy.
China’s policy makers outlined the key economic tasks for 2020 during the annual Central Economic Work Conference, with the major focus on maintaining sustained and sound economic and social development.
China will ensure economic stability as the top priority by upholding the policy framework of stable macro policies and flexible micro policies which are to be fine-tuned in line with economic conditions.
Implementation of prudent monetary policy and proactive fiscal policy is of paramount importance in alleviating the downside risks of the economy and pursuing a more sustainable path of economic expansion for 2020.





Dec 3,2019
Economic Acumen
CEBI Research

China’s manufacturing activities rebounded in November


China’s newly released manufacturing PMI for November rebounded to 50.2 from 49.3 last month, returning to expansion for the first time in seven months. The uptrend also extended to the services sector, as non-manufacturing PMI increased to 54.4 against October’s 52.8.
Economic activities in manufacturing sector expanded at an accelerating pace in November on improved domestic demand and surging production activities boosted by government’s stimulus measures.
Given that unresolved trade disputes and global economic slowdown have threatened economic stability of China, China’s policy makers pledge to step up efforts to revive growth momentum.
Macroeconomic policy support through accommodative liquidity management and proactive fiscal expansion will sustain modest growth of China’s economy. Looking forward, China will further broaden policy actions on both monetary and fiscal front to stimulate growth of economic activities in coming quarters.





Nov 28,2019
Economic Acumen
CEBI Research

China’s policy outlook for 2020: fine-tuning macro-economic policies to sustain economic growth


Continuation of trade disputes with the U.S. and global economic slowdown have hampered the growth prospect of China. For the first ten months of 2019, China’s major economic indicators have embedded into a slowing trend, with growth of external trade, fixed asset investment (FAI) and retail sales decelerating in vary degrees.
In accordance with current economic conditions and structural reform objectives, we are of the view that China’s government will pursue a policy characterized by prudent liquidity management and proactive fiscal expansion to cushion further slowdown in economic activities.
The PBOC will maintain prudent monetary stance through a mix of targeted lending facilities to support economic recovery while both the central and local governments will roll out more supportive fiscal policies.
China will continue to fine-tune the current macro-economic policies to sustain economic growth in 2020. The steady growth in China along with stable momentum of job creation will support the ongoing transformation and upgrading of China’s economy.





Nov 14,2019
Economic Acumen
CEBI Research

China’s October economic indicators encountering slower growth


In the face of unresolved US-China trade disputes and global economic slowdown, China’s major economic indicators embedded into a slowing trend in October, with growth of fixed asset investment (FAI), property investment, industrial production, and retail sales decelerating in vary degrees.
Looking forward, the pessimistic market sentiment driven by the global cyclical slowdown continues to cloud the growth outlook of China’s economy.
China’s policy makers aims to maintain stable growth of credits and government expenditures in handling economic fluctuations with which prudent monetary policy and expansionary fiscal policy are to be fine-tuned in line with economic conditions, thus strengthening the growth momentum in coming quarters.
We are of the view that China will leverage the fundamental role of domestic demand in promoting economic growth and macroeconomic policy support will help alleviate the downside risks of the economy and maintain a more sustainable path of economic expansion for the rest of 2019.





Nov 4,2019
Economic Acumen
CEBI Research

HK trapped into economic woes


Shadowed by ongoing local protests, unresolved US-China trade disputes and deceleration of global growth, Hong Kong (HK) faced deep contraction of economic activities on both year-to-year and quarter-to-quarter basis by 2.9% (vs 2Q2019’s +0.4%) and 3.2% (vs 2Q2019’s -0.5% ) in 3Q2019. For the first three quarter of 2019, HK’s economy shrank 0.7% YoY%.
The preliminary growth figure signaled that HK’s economy has entered into a technical recession for the first time in a decade.
In sum, HK economic conditions experienced an abrupt deterioration in 3Q2019 as external trade and retail sales dropped at a faster pace, while investment and visitors’ spending have been hit by stock market volatilities, falling number of mainland visitors and a weaker renminbi.
Deceleration of global trading activities and local riots promote pessimistic market sentiment, slamming HK’s economic momentum and posing broader risks to growth outlook. With potential threats on the economy, we forecast HK’s economic growth will contract by 0.5% in 2019.





Oct 21,2019
Economic Acumen
CEBI Research

China’s economic strength softened in 3Q201


Surrounded by unresolved trade disputes and global economic slowdown, China’s economic growth decelerated to three-decade low at 6.0% YoY in 3Q2019, falling behind the consensus estimate of 6.1% and 2Q2019’s 6.2%.
The first three-quarters of 2019 posted GDP growth of 6.2% YoY, which was in line with the consensus estimate and within the growth target between 6.0% and 6.5%.
China’s major economic indicators showed a softening trend in 3Q2019 against 2Q2019, with growth of fixed asset investment (FAI), industrial production, retail sales and external trade decelerating in vary degrees.
Against the backdrop of surging downward pressure on the economy, China’s policymakers have launched sizable stimulus measures to prop up growth.
We are of the view that macroeconomic policy support will further ensure a sustainable path of economic expansion. Overall macroeconomic conditions remain stable with which we expect GDP growth will reach 6.2% YoY in 2019.





Oct 11,2019
Strategy Outlook
CEBI Research

4Q2019 Market and Investment Outlook
Recession fears clouding market outlook


Softening global growth expectations are escalating amid heightened market uncertainties including ongoing US-China tensions over international trade, ‘no deal’ Brexit, mounted geo-political risks, the reappearance of inverted yield curve and fluctuation of oil prices.
Global loosening of credits becomes the key policy tool to restore growth momentum and the easing cycle may turn out to be longer and deeper than previously expected.
The investment theme shaping financial markets for 4Q2019 hinges on balancing the risks and opportunities regarding the progress of US-China trade talks, the impact of Brexit, and near-term economic outlook of the U.S. and China’s economy.
Equity markets remain volatile in the U.S. and Europe with possible gathering of clouds for a correction while HK and China equity markets are gradually recovering from weak performance in 3Q2019 due to favorable valuation, supportive stimulus measures and improved sentiment for a possible partial trade deal between the U.S. and China.
Fixed income market will continue to absorb excess liquidity from central banks’ pivot towards lower interest rates.
Forex market will still favor USD with EUR and GBP facing more weakness while CNY hovering at a reasonable range.





Oct 2,2019
Economic Acumen
Commentary by CEBI Research Team

Deepened economic risks weighting on global equity markets


Third quarter of the global economy was struggling with the lack of growth momentum and marked variation in economic conditions. The global business cycle continues to evolve with economies demonstrating a downswing in economic activities.
Mounted volatilities in global equity markets remained intact as unresolved US-China trade disputes, uncertainty of ‘no deal’ Brexit, mounted geo-political risks and fluctuation of oil prices weighted on the market sentiment.
In the face of heightened economic risks, major central banks have expressed their dovish views on monetary policy, thus maintaining an accommodative liquidity conditions to prop up economic growth.
Looking ahead, the amplifying economic and political risks surrounding the global economy enhance growth deceleration that threatens financial stability. Investors turn to be more cautious about market outlook and volatilities of financial markets will continue to skew to the high side in 4Q2019.





Sep 23,2019
Economic Acumen
Commentary by CEBI Research Team

The Fed’s second rate cut in 2019


The U.S. Federal Reserve (the Fed) announced to reduce the target range of the Fed fund rates (FFR) from 2.0%~2.25% to 1.75%~2.0%, the second reduction in overnight lending rate in 2019.
In addition to the reduction, the Fed responded to the breakdown early last week in the overnight repurchase lending market by cutting the interest paid on excess reserves by 30 bps.
The FOMC statement indicates that economic activities have been on track for a moderate pace of expansion. Low unemployment rate has remained intact. Household spending has been rising at a robust pace but business fixed investment and exports have demonstrated weakening trend. Overall inflation and core inflation have softened below 2% along with stagnant growth in wages.
Given the softening of global economic growth and heightened economic uncertainties from unresolved trade disputes, Brexit and political instability in the Korean Peninsula and the Middle East, we believe the Fed will further take preemptive steps to foster economic momentum by lowering FFR by 25 bps one more time in December.





Sep 16,2019
Economic Acumen
Commentary by CEBI Research Team

China’s August economic indicators bracing for slower growth


In the face of unresolved US-China trade disputes and global economic slowdown, China’s major economic indicators continued to be embedded into slowing trend in August, with growth of fixed asset investment (FAI), property investment, industrial production, external trade and retail sales decelerating in vary degrees.
Looking forward, the pessimistic market sentiment driven by the global cyclical slowdown clouds the growth outlook of China’s economy.
China’s policymakers aims to maintain stable growth of credit and social financing scale in handling economic fluctuations with which prudent monetary policy and expansionary fiscal policy are to be fine-tuned in line with economic conditions, thus strengthening financial stability and consolidating the momentum of stable economic growth.
We are of the view that macroeconomic policy support will be further deployed to alleviate the downward pressure in the economy and China is committed to pursuing a more sustainable path of economic expansion for the rest of 2019.





Sep 12,2019
Economic Acumen
Commentary by CEBI Research Team

China’s August economic indicators bracing for slower growth


In the face of unresolved US-China trade disputes and global economic slowdown, China’s major economic indicators continued to be embedded into slowing trend in August, with growth of fixed asset investment (FAI), property investment, industrial production, external trade and retail sales decelerating in vary degrees.
Looking forward, the pessimistic market sentiment driven by the global cyclical slowdown clouds the growth outlook of China’s economy.
China’s policymakers aims to maintain stable growth of credit and social financing scale in handling economic fluctuations with which prudent monetary policy and expansionary fiscal policy are to be fine-tuned in line with economic conditions, thus strengthening financial stability and consolidating the momentum of stable economic growth.
We are of the view that macroeconomic policy support will be further deployed to alleviate the downward pressure in the economy and China is committed to pursuing a more sustainable path of economic expansion for the rest of 2019.





Sep 9,2019
Economic Acumen
Commentary by CEBI Research Team

The PBOC’s RRR cut to spur economic growth


With the aim to boost the softening momentum of Chinafs economy, the Peoplefs Bank of China (PBOC) announced a cut of 50bp in the required reserve ratio (RRR) for all banks, effective 16th September, 2019.
This was the third RRR cut in 2019, reducing the RRR for big banks to 13.0 percent. The PBOC also strengthens the support for small businesses and private enterprises by offering an additional 100bp RRR cut for qualified city commercial banks in two phases, effective 15th October 2019 and 15th November 2019.
A net RMB 900 billion potential credits will be injected in the economy to reduce the real cost of social financing. A prudent and neutral monetary stance of the PBOC remains intact, thus avoiding excessive stimulus and cultivating a stable monetary and financial environment for China’s economy.
The latest RRR cut enhances counter-cyclical adjustments and maintains abundant liquidity in the economy, thus strengthening sustainable growth momentum.





Aug 26,2019
Economic Acumen
Commentary by CEBI Research Team

Re-escalation of trade tensions darkening global economic outlook


China announced to impose retaliatory tariffs on USD $75 billion of imports from the U.S., targeting agricultural and automotive products. Additional 5% or 10% tariffs will be placed on U.S. imports on 1st September 2019 while resuming tariffs on U.S. imports of automobiles and automobile parts at a rate of 25% and 5%, effective on 15th December 2019.
President Trump responded to the Chinese retaliatory tariffs by raising existing 25% tariffs on some USD $250 billion in imports from China to 30% tariffs on 1st October 2019.
The continued tit-for-tat escalation of trade disputes between the U.S. and China severely affect the multilateral trading system and disturb the international trading order. Implementation of the tariffs sets the stage for increasing business conflicts among countries.
We are of the view that overseas demand for the U.S. and Chinese products will soften further on the kickoff of full-blown trade war, which in turn undermines growth momentum of the two biggest economies of the world.





Aug 22,2019
Economic Acumen
Commentary by CEBI Research Team

Emerging markets embedded into gloomy outlook


The pace of global economic growth is decelerating as fading trend of growth momentum in different economies becomes more apparent.
With fears growing that the global economy will step into recession soon, the U.S. Federal Reserve (the Fed) kicked off the rate cut cycle in July with expectation of more and larger cuts in upcoming Federal Open Markets Committee (FOMC) policy meetings.
The accommodative stance of monetary policy strengthens a favorable interest rate environment for emerging economies to resist trade policy shocks and weakening domestic demand with which EM’s central banks are now having more room to cut borrowing costs to stimulate economic growth.
The International Monetary Fund (IMF) has cut growth forecasts of EM and developing economies for 2019 and 2020 again to 4.1% and 4.7%, justifying that economic activities expand at a slower pace.
Looking ahead, the continued complication of worldwide business environment could make the EM economic recovery more challenging.





Aug 14,2019
Economic Acumen
Commentary by CEBI Research Team

China’s July economic indicators encountering softening trend


Amid the escalation of trade tensions and global economic slowdown, China’s major economic indicators pointed to a weakening trend in July, with growth of fixed asset investment (FAI), property investment, industrial production and retail sales decelerating in vary degrees in July.
Looking forward, although the U.S. delays 10% tariffs on a series of consumer goods imported from China, the unresolved trade disputes still cloud the growth outlook of global economy.
Against the surging downward pressure on the economy, China will strengthen the fundamental role of stimulus measures in promoting economic growth and coping with volatile changes in the external environment.
We are of the view that macroeconomic policy support will help maintain steady growth of economic activities, thus attaining a more sustainable path of economic expansion in 2019.





Aug 7,2019
Economic Acumen
Commentary by CEBI Research Team

Global economic outlook embracing heightened economic and political risks


The intensifying US-China trade tensions over the additional tariffs of 10% on $300 billion of Chinese goods, US naming China as currency manipulator, renminbi tumbling beyond 7 per US dollar, Brexit’s uncertainty, trade disputes between Japan and South Korea, and turbulence of emerging market (EM) currencies are dragging down market sentiment and weighting on the growth momentum of global economy.
Volatilities of global equity markets are skewed to the high side on heightened economic and political risks. During the start of August, the correction of equity markets adds anxiety and confusion to global financial markets.
IMF has cut the global growth forecasts for 2019 and 2020 again to 3.2% and 3.5%, the fourth time in nine months, justifying that the global economy demonstrates diminishing strength.
The continued complication of worldwide economic and political environment will further weaken global trade, consumption and investment, paving the way for sluggish global growth and more short-term turbulences in financial markets for the rest of 2019.





Aug 1,2019
Economic Acumen
Commentary by CEBI Research Team

The Fed kicking off the first rate cut in more than a decade


The U.S. Federal Reserve (the Fed) announced to reduce the target range of the Fed fund rates (FFR) from 2.25%~2.5% to 2.0%~2.25%, the first reduction in overnight lending rate since December 2008 which was immediately after the financial crisis.
The softening of global economic growth and modest inflation of the U.S. economy prompt the Fed to kick off the fifth rate cut cycle since 1995, with the aim to maintain growth momentum.
Surging global economic pressures and muted inflationary pressures leave more room for the Fed to maintain loosening stance in monetary policy.
Given the heightened economic uncertainties, we believe the Fed will further take preemptive steps to prevent the longest expansion of the U.S. economy coming to an end by reducing the FFR by 25 bps in Sept and Dec FOMC meeting.





July 22,2019
Economic Acumen
Commentary by CEBI Research Team

3Q2019 Market and Investment Outlook-Revitalizing market sentiment


Surrounded by mounted economic uncertainties, the global economy continues to struggle with weak growth momentum and variation in economic conditions. In the face of heightened economic risks, major central banks have expressed their dovish views on monetary policy. Interest rate cuts remain as the main catalyst to restore economic momentum.
3Q2019 is a challenging quarter for investors, with concerns about the Fed’s rate cuts, stronger dollar, ongoing trade disputes, geopolitical uncertainties, and economic slowdown dominating investor sentiment and creating waves of volatility in financial markets. Markets have priced in tariffs’ impact and rate cuts expectation for some time while China’s growth deceleration remains as the major uncertain factor affecting investment sentiment and corporate earnings. We are of the view that China’s proactive economic policies will help improve financial market conditions and restore market confidence.
We believe that equity markets of developed economies will experience some degree of correction after strong rebound in 1H2019 while HK and China equity markets are gradually recovering due to favorable valuation and supportive stimulus measures. Fixed income market will turn active in absorbing excess liquidity from rate cuts. Forex market will still favor USD.





July 15,2019
Economic Acumen
Commentary by CEBI Research Team

China’s economic strength softened in 1H2019


Shadowed by unresolved trade disputes and global economic slowdown, China's economy encountered a softening trend at 6.2% YoY in 2Q2019, which was in line with the consensus estimate but lower than 1Q2019's 6.4%.
The first half of 2019 posted GDP growth of 6.3% YoY, which was within the growth target between 6.0% and 6.5%. China's major economic indicators showed a slowing trend in 1H2019 against 2018, with growth of fixed asset investment (FAI), industrial production, retail sales and external trade decelerating in vary degrees.
Looking forward, the trade war headwinds continue to cloud the growth outlook of global economy. Against the backdrop of surging downward pressure on the economy, China policymakers have launched sizable stimulus measures to prop up growth, thus coping with volatile changes in the external environment.
We are of the view that macroeconomic policy support will further stimulate growth pick-up in 2H2019, thus ensuring a more sustainable path of economic expansion. Overall macroeconomic conditions remain stable with which we expect GDP growth will reach 6.3% YoY in 2019.





May 16,2019
Economic Acumen
Commentary by CEBI Research Team

China’s April economic indicators encountering softening trend


Shadowed by the fears over escalation of trade disputes, China's general economic indicators posted a slowing trend of growth in April with which fixed asset investment (FAI), industrial production, retail sales and external trade grew at a decelerating pace. Job market remained stable as April survey-based urban unemployment rate dropped to 5.0% from March's 5.2%.
Looking forward, market pessimism has been built up regarding possibility of a long-lasting trade war between the U.S and China. Unresolved trade disputes, surging geo-political risks and weakening renminbi are the major threats to China's economy in coming months.
We believe China policymakers will further strengthen counter-cyclical policy action on both monetary and fiscal front to boost economic growth. Macroeconomic policy support will create a favorable environment to ensure a more sustainable path of economic expansion. In sum, China's economic fundamentals remain sound and economic activities will maintain a stable growth momentum in 2Q2019.





May 6,2019
Economic Acumen
Commentary by CEBI Research Team

Hong Kong’s economy slowed in the first quarter


Clouded by unresolved trade disputes, deceleration of global growth momentum and escalation of geo-political risks, Hong Kong's (HK) economy faced the slowest pace of growth at 0.5% in nearly ten years during 1Q2019, significantly lower than 4Q2018's 1.2% and 2018's 3.0%.
Both domestic and external demand weakened due to slowdown in investment and exports. Private consumption expenditures, the major driver of economic growth, grew marginally at 0.1% YoY, while gross domestic fixed capital formation declined by 7% YoY. Exports of goods dropped more than 4.0% in 1Q2019, reflecting the deceleration of global trading activities.
Looking forward, trade talks between the U.S. and China have achieved great progress and it is likely for both sides to reach an agreement in 2Q2019.
Along with solid economic fundamentals such as a stabilizing China's economy, low unemployment rate, muted interest hikes, surging mainland visitors to HK and rising property prices, HK's economy is expected to restore stronger growth momentum in coming quarters. We expect HK's economic growth will reach 2.2% YoY in 2019.





May 2,2019
Economic Acumen
Commentary by CEBI Research Team

The Fed keeping the rate unchanged


At the conclusion of the third Federal Open Markets Committee (FOMC) policy meeting on 1st May 2019, the U.S. Federal Reserve (the Fed) left the target range of the Fed fund rates (FFR) unchanged again at 2.25% to 2.5% but reduced the interest rate paid on required and excess reserve balances from 2.4% to 2.35%.
The Fed continues to signal its dovish tone to the market that it would remain patient before adopting any further changes in interest rates. In sum, the Fed is still optimistic on the growth momentum of the U.S. economy.
The economy looks on track to pursue faster expansion of economic activities. Strong labor conditions remain intact, reflected by low unemployment rate. Muted inflationary pressures and weakening growth in wages leave more room for the Fed to maintain 'Patience' stance in monetary policy.
Given the softening of global economic growth as well as heightened economic uncertainties, we believe the Fed will leave the interest rate unchanged in 2019.





Apr 17,2019
Economic Acumen
Commentary by CEBI Research Team

China’s economic strength remained stable in 1Q2019


China's first-quarter economic activities for 2019 grew 6.4% YoY, beating the consensus estimate of 6.3% and in line with fourth-quarter growth of 2018. China's economic indicators showed an uptrend in 1Q2019, with growth of fixed asset investment (FAI), industrial production and retail sales accelerating in vary degrees.
In sum, China's economy still maintained a stable growth momentum within the growth target between 6.0% and 6.5%. Looking forward, against the backdrop of surging downward pressure, China policymakers have strengthened the size of stimulus measures to prop up growth in an attempt to prevent the economy from losing growth momentum.
We are of the view that macroeconomic policy support will further stimulate growth pick-up in coming quarters, thus ensuring a more sustainable path of economic expansion. We expect GDP growth will reach 6.3% YoY in 2019.





Apr 12,2019
Economic Acumen
Commentary by CEBI Research Team

China’s exports rebounded in March


China's March exports demonstrated a strong rebound at 21.3% YoY in Yuan terms, significantly above consensus estimate of 6.3% and Jan-Feb's 0.1%. Imports contracted 1.8% YoY in March, below consensus estimate of 2.6% and Jan-Feb's 1.5%. Total trade growth rebounded from Jan-Feb's 0.7% YoY to 9.6% YoY in March with which trade surplus narrowed from Jan-Feb's RMB 308.43 bn to RMB 221.23bn.
For 1Q2019, exports and imports rose 6.7% and 0.3% respectively, below 4Q2018's 8.6% and 9.1% while total trade growth slowed to 3.7% from 8.8% in 4Q2018. Better-than-expected March's exports were mainly due to rising overseas shipment after the Spring Festival while shrinking imports reflected the impact of tariffs.
Headwinds facing the world trade have endangered global growth momentum. In the face of softening economic growth, China's policymakers has launched stimulus measures to alleviate negative impact of trade war, thus boosting growth momentum of China's economy.





Apr 3,2019
2Q2019 Market and Investment Outlook

Markets’ rebalancing in sight


First quarter of the global economy was struggling with the lack of growth momentum. Major central banks have expressed their dovish views on monetary policy. The optimism of investors was driven by their belief that loosening monetary and fiscal stance of nations helps revive growth momentum starting in 2Q2019.
The dominant investment theme shaping financial markets for 2Q2019 hinges on the progress of US-China trade talks, the threat of ‘no deal’ Brexit, the effectiveness of China’s stimulus measures and corporate earnings. China’s economic slowdown remains as the major uncertain factor affecting investment sentiment and corporate earnings.
China’s economic cycle has bottomed in 1Q2019 reflecting the impact of US tariffs. Stepping into 2Q2019, China’s proactive economic policies will help improve financial market conditions and restore market confidence. China and HK equity markets will outperform due to favorable valuation and supportive stimulus measures. Fixed income market will turn active in absorbing excess liquidity from equity markets. Forex market will favor emerging market currencies amid muted US rate hike.





Apr 1,2019
Economic Acumen
Commentary by CEBI Research Team

China’s manufacturing activities rebounded in March


China's newly released manufacturing PMI for March rebounded to 50.5 from 49.2 last month. The uptrend also extended to the services sector, as non-manufacturing PMI for March increased to 54.8 against February's 54.3.
Economic activities in manufacturing sector expanded at an accelerating pace in March on improved domestic demand and surging production activities boosted by government's stimulus measures.
Given that unresolved trade disputes and global economic slowdown has threatened economic stability of China, China policymakers pledge to step up efforts to prevent the economy from losing growth momentum.
We are of the view that economic growth will slow in 1Q2019 but macroeconomic policy support through accommodative liquidity management and proactive fiscal expansion will revive the growth momentum of China starting from 2Q2019.





Mar 25,2019
Economic Acumen
Commentary by CEBI Research Team

Global equity markets bracing heightened economic risks


Global equity markets drift lower again with surging volatilities amid the reappearance of inverted yield curve. U.S. and major European equity markets plunged between 1.7% and 2.5% while HK market dropped 2%.
Global recession warning is the key message of flattening yield curve reflecting the concerns about the prospect of economic growth and deflation.
Recently, the Federal Reserve (Fed) signaled its "patient" attitude to the market in wake of heightened downside risks, reflecting its pessimism towards global economic growth.
Although equity markets demonstrate strong rebound in 1Q2019, surging economic uncertainties will push forward further correction. The amplifying downside risks driven by a clouding global growth outlook threaten financial stability. Investors turn to be more cautious about market outlook and volatile swings in the index are expected in 2Q2019.





Mar 25,2019
Economic Acumen
Commentary by CEBI Research Team

Global equity markets bracing heightened economic risks


Global equity markets drift lower again with surging volatilities amid the reappearance of inverted yield curve. U.S. and major European equity markets plunged between 1.7% and 2.5% while HK market dropped 2%.
Global recession warning is the key message of flattening yield curve reflecting the concerns about the prospect of economic growth and deflation.
Recently, the Federal Reserve (Fed) signaled its "patient" attitude to the market in wake of heightened downside risks, reflecting its pessimism towards global economic growth.
Although equity markets demonstrate strong rebound in 1Q2019, surging economic uncertainties will push forward further correction. The amplifying downside risks driven by a clouding global growth outlook threaten financial stability. Investors turn to be more cautious about market outlook and volatile swings in the index are expected in 2Q2019.





Mar 21,2019
Economic Acumen
Commentary by CEBI Research Team

The Fed’s “Patience” putting the rate hike on hold in 2019


At the conclusion of the second Federal Open Markets Committee (FOMC) policy meeting in 2019, the U.S. Federal Reserve (the Fed) left the target range of the Federal fund rates (FFR) on hold at 2.25% to 2.5%, signaling its "patient" attitude to the market that it will slow down the rate hike cycle in wake of heightened downside risks surrounding the U.S. economy.
The Fed also announced to cut the pace of monthly redemption of Treasury securities from $30bn to $15bn starting in May and will end the normalization of balance sheet in September.
In sum, the Fed is still positive on the growth momentum of the U.S. economy. However, the Fed's decision to pause on interest rate hikes strengthens its dovish stance towards U.S. monetary policy in 2019.
Given the softening of global economic growth and heightened economic uncertainties, we believe the Fed will leave the interest rate unchanged for the rest of 2019.





Mar 14,2019
Economic Acumen
Commentary by CEBI Research Team

China’s economic momentum sustained in 2M2019 despite mounted downside risks


With heightened economic risks weighing on global economic outlook, China's general economic indicators demonstrated a mix picture of growth in the first two months of 2019 with which industrial production dropped while fixed asset investment (FAI) posted a rebound and retail sales grew at a stable pace.
Looking forward, unresolved trade disputes and global economic slowdown are the major threats to economic stability of China's economy.
Given that the major emphasis of the second annual session of China's 13th National People's Congress (NPC) in 2019 points to growth stabilization, China policymakers pledge to step up efforts by enlarging the size of stimulus measures in order to prevent the economy from losing growth momentum.
We are of the view that the surging growth headwinds will prohibit the robust rebound of economic activities in 1Q2019 but macroeconomic policy support will revive the growth momentum of China starting from 2Q2019.





Mar 6,2019
Economic Acumen
Commentary by CEBI Research Team

China’s 2019 NPC: growth stabilization becoming the top agenda


The goal of stabilizing growth momentum for China's economy amid mounting financial risks becomes the major emphasis of the second annual session of China's 13th National People's Congress (NPC) in 2019.
In the face of trade disputes and complicated economic environment, China's economy experiences cooling strengths as the government report sets slower growth target between 6.0% and 6.5% for 2019 along with different types of stimulus measures.
Against the backdrop of surging downward pressure on the economy, China policymakers strengthen the size of stimulus measures to prop up growth in an attempt to prevent the economy from losing growth momentum.
Although China faces increased headwinds, macroeconomic policy support will stimulate the pick-up in aggregate demand, thus ensuring a more sustainable path of economic expansion.





Feb 27,2019
China Property
CEBI Research

China Property


More fine tuning policies to come
Debt refinancing surged by 90% in Jan2019
RMB appreciated against US dollars
Expect a conservative 2019 sales target by China developer
Weak Jan 2019 new home sales in China
Bullish view on COLI and Logan property





Feb 14,2019
Economic Acumen
Commentary by CEBI Research Team

Blueprint of “Greater Bay Area” initiative embracing a new era of regional development


The blueprint for the development of the Guangdong-Hong Kong -Macao Greater Bay Area (GBA) was finally unveiled on 18th February 2019 by the Central Committee of the Communist Party of China and the State Council, with the objective of enhancing economic integration and transforming the area into a global economic powerhouse.
Covering nine cities in Guangdong province and two administrative regions, the GBA currently generates US$1.5 trillion value of GDP with a total population of over 69 million.
Development of the area through enhancement in connectivity, capital and talent flow helps expand regional growth momentum with which the region will be developed as a new economic hub to play a leading role in global innovation, finance and trade.
In sum, the GBA will become a leading global innovation hub, boost infrastructure connectivity between cities, strengthen HK's role as an international center of finance, shipping and trade as well as the center for the offshore renminbi business.





Feb 14,2019
Economic Acumen
Commentary by CEBI Research Team

China’s trade growth showed a seasonal rebound in January


China's external trade demonstrated a stable growth at the start of 2019 with which January's exports and imports growing at 13.9% YoY and 2.9% YoY in Yuan terms, above consensus estimate of +3.8% and -1.9% as well as December's +0.2% and -3.1%.
Total trade growth rebounded from December's -1.2% YoY to 8.7% YoY in January with which trade surplus narrowed from December's RMB 395.99 bn to RMB 271.16 bn. Better-than-expected January's external trade figures was mainly due to front-loading of trade orders before the Spring Festival holidays.
In sum, although President Trump signals great progress during the current trade talks between the U.S. and China and may extend the deadline for negotiating a trade deal, the trade war has shaken the confidence of businesses and disrupted the global supply chain.
In the face of softening economic growth, Chinese policymakers launch stimulus measures to alleviate negative impact of trade war, thus lending resilient support to the soft-landing of external trade sector in 2019.





Jan 31,2019
Economic Acumen
Commentary by CEBI Research Team

The “Patient” Fed to keep the rate hike on hold


At the conclusion of the first Federal Open Markets Committee (FOMC) policy meeting on 30th January 2019, the U.S. Federal Reserve (the Fed) left the target range of the Fed fund rates (FFR) unchanged at 2.25% to 2.5%.
The Fed signaled its dovish tone to the market that it would be "patient" on future rate hikes in the face of surging downside risks hitting the U.S. economy amid global growth headwinds, trade disputes with China and government budget talks.
In sum, the Fed is still optimistic on the growth momentum of the U.S. economy. Economic activities are still expanding at a solid rate, supported by stable job creation and consumer spending. Inflation was muted closer to 2% while wage growth showed a weakening trend, thus leaving more room for the Fed to delay monetary tightening.
Given the softening of global economic growth as well as heightened economic uncertainties, we believe the Fed will leave the interest rate unchanged in 1H2019.





Jan 21,2019
Economic Acumen
Commentary by CEBI Research Team

China’s economy faced softening growth in 2018


In 2018, China's economic activities experienced cooling strengths as the economy embedded into slower growth of 6.6%, staying in line with market consensus but below 2017's 6.8%. Major economic indicators braced for downward trend.
For 4Q2018, China's economic expansion edged down to 6.4% YoY, in line with the market estimate of 6.4% but lower than 3Q2018's 6.5% and 1H2018's 6.8%.
Despite trade disputes and complicated global economic environment facing China in 2018, China still maintained a medium-high growth rate, indicating the great progress in supply-side structural reforms and enhancement of growth quality and efficiency.
Looking forward, downside risks are surging in the sense that US protectionism and global economic slowdown threaten economic stability of China. However, China's macroeconomic policy support will stimulate the pick-up in aggregate demand, thus ensuring soft landing of the economy. We believe China's GDP growth will reach 6.3% YoY for 2019.





Jan 15,2019
Economic Acumen
Commentary by CEBI Research Team

Trade disputes weighted on China’s trade growth in 2019


China's external trade demonstrated decelerating growth in 2018 with exports and imports growing at 7.1% YoY and 12.9% YoY in Yuan terms, lower than 2017's 10.8% and 18.7%.
In the face of softening global demand, growing disruptions of trade war with the U.S. and downward pressure of economic growth, December total trade slumped by 1.2% YoY against November's +8.3% with which exports rose mildly by 0.2%, significantly lower than consensus' 6.6% and November's 8.7% while imports contracted by 3.1% YoY, far lower than consensus' +12.0% and November's +7.7%.
In sum, re-lifting tariff penalties up to 25 percent on more Chinese goods after 90-day ceasefire by the U.S. remains as the biggest threat to bilateral trades.
In order to resist headwinds of trade war, Chinese policymakers will launch more policy tools to lend solid support to the soft-landing of external trade sector in 2019.





Jan 11,2019
Economic Acumen
Commentary by CEBI Research Team

China’s inflation remained stable in 2018


China's December CPI inflation demonstrated a decelerating trend, edging up only 1.9 % YoY (+0.0% MoM and November's +2.2% YoY), while producers' prices posted mild growth of 0.9% YoY (-1.0% MoM).
Slower December inflation was attributable to moderating growth in non-food prices, while decelerating factory-gate prices was driven by correction of energy and material prices as well as weak aggregate demand for products.
For 2018, the CPI inflation fluctuated between 1.5% and 2.5%, with year-end inflation reaching 2.1%, lower than the official target of 3.0% but higher than 2017's 1.6%. The PPI rose 3.5% YoY in 2018, significantly lower than 2017's 6.3%.
Headwinds towards economic outlook and slower inflation prompt the policymakers to launch more stimulus measures, thus reviving economic momentum and maintaining stable inflation for China's economy in 2019.





Jan 3,2019
Economic Acumen
Commentary by CEBI Research Team

Heightened economic risks to weight on global equity markets


Entering 2019, global equity markets drift lower and demonstrate surging volatilities as unresolved US-China trade disputes, shutdown of the U.S government, uncertainty of 'no deal' Brexit, mounted geo-political risks and sharp drop of oil prices keep the bulls out of the market and weight on the market sentiment.
Volatilities of global equity markets continue to skew to the high side and a clouding global growth outlook, reflected by recent weaker-than-expected global economic indicators, comes with heightened economic and political risks.
Shadowed by geo-political risks across Middle East, Eurozone, the U.K and Korean Peninsula, the world economy is on the brink of further slowdown. In sum, the amplifying downside risks have added anxiety and confusion to the market that threatens financial stability. Investors turn to be more cautious about market outlook and volatile swings in the index are expected in 2019.





CEBI Research
2019
Market and Investment Outlook

2019 Global Market and Investment Outlook


The global economic recovery continues at a decelerating pace with which diverging trends of growth momentum in different economies become more apparent.
The trump’s tariffs, mounted geo-political risks, the tightened monetary stance of the U.S. and Eurozone, postponement of Brexit vote by UK Parliament, Italy’s fiscal standoff and turbulence of emerging market (EM) currencies are dragging down market sentiment and weighting on the growth momentum of global economy.
Volatilities of global financial markets are skewed to the high side and a clouding global growth outlook comes with elevated economic and political risks.
The continued complication of worldwide business environment could make the global economic recovery more challenging in 2019.
From a valuation perspective, the price-to-earnings ratio (PER) of the U.S. equity market is close to its historical average. Emerging market stocks laggards, which have been faced substantial correction in 2018, are becoming more attractive to investors and are expected to provide higher returns in 2019.
The correction of Hong Kong’s stock market in 2018 is still considered as a potential laggard. Attractive equity returns in Hong Kong market should draw buying interest but it takes times for investors to restore investment confidence.
After discounting for the uncertainties that have been priced-in in 2018 as well as the market concerns diminishing and corporate earnings improving in the coming year, we forecast that the HSI and HSCEI will slowly recover to reach 28,600 and 12,500, with PER multiples of 10.5x and 8.5x respectively by end-2019.