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December 22, 2021
Market and Investment Outlook
CEBI Research

2022 Market and Investment Outlook
Navigating recovery roadmap of global economy


The ongoing coronavirus pandemic, related policy responses, vaccination rollout, supply chain disruptions and inflation fears have dominated global economic developments in 2021.
Price inflation rises on a faster pace above central banks’ targets in the advanced economies amid supply-demand imbalances in post-pandemic world. The marked improvement in economic conditions of developed and emerging worlds attract the attention of global central banks to tighten monetary easing to resist inflationary pressures.
Entering into 2022, western nations are embedded into "living with Coronavirus” strategy that further restores normalization of economic activities. Countries with higher vaccination rates could have reduced levels of hospitalizations, thus making restrictions shorter, alleviating economic risks and providing tailwinds for growth. However, the health risks over the spread of Omicron Variant (OV) as well as supply constraints alongside high inflation remain as the headwinds to impinge on growth momentum, especially during the first half.
Global central banks and governments are aware of continued monetary and fiscal policy support as a sizable cushion against the possible downside risks of recovery path and they will proceed cautiously to an exit from their extraordinary pandemic-era support in the wake of global economic indicators returning to pre-pandemic level and demonstrating signs of stability.
China aims at maintaining stability of economic momentum as the economy is facing threefold pressure, namely contraction of aggregate demand, supply shocks and weakening growth expectation. China’s economy will face slower growth in 1H2022 while the pick-up pace of consumption and investment along with macroeconomic policy support will help alleviate the downside risks and accelerate growth momentum in 2H2022, thus ensuring a more sustainable recovery of economic strengths.
Although the global economy faces uncertainties around the path to economic normalization and the threat of OV creates short-term economic turbulences, recovery momentum remains resilient as households and firms around the globe have adapted to life with coronavirus that accelerates further reopening of economies. Global economic growth remains on track in 2022 at 3.8%.





December 17, 2021
Economic Acumen
CEBI Research

The Fed ending the bond-buying stimulus program in March 2022


The Fed kept the target range of the FFR unchanged but accelerated the pace of tapering asset purchases by wrapping up pandemic-era bond purchases program in March 2022. The move paved the way of proceeding with expected three rate hikes in 2022 to battle escalating inflation pressure while ensuring continued recovery of economic activities.
The economy was strengthening on the progress on vaccinations and strong policy support but supply and demand imbalances resulted in the elevation of inflation. The dramatic policy shift of the Fed helps clear the way to launch the first rate hike in 2022 after the pandemic in an attempt to ease the staggering inflation.
Amid the U.S. economic rebound clouded by the recent fast-spreading Omicron Variant (OV) of Coronavirus and worldwide supply chain chaos, the Fed and Biden’s administration point to maintain the accommodative stance of economic tools with which continuation of near-zero interest rate and expansionary fiscal conditions remain intact in 1H2022 while three 25bp rate hikes will be launched in 2H2022, thus supporting growth momentum of the U.S. economy in 2022.





December 15, 2021
Economic Acumen
CEBI Research

China's economy maintaining stable growth momentum in November


China’s economy encountered modest growth momentum in November as weakening trend has emerged from some economic indicators under which FAI, property investment and retail sales decelerated in varying degree alongside surging consumer and factory-gate price level but industrial production and external trade rebounded on both month-on-month and year-on-year basis.
In sum, the economy faced slowing momentum in 3Q2021 along with surging downward pressures on economic activities in 4Q2021, mainly driven by the ongoing pandemic, supply chain constraints and power shortage, property developers’ debt crisis and regulatory crackdown on business. China’s policy makers have stepped up efforts on policy stimulus to revitalize market and ensure the sustainable development of China’s economy.
China has made coordinated efforts to revive growth strengths of the economy. We forecast that the trajectory of China's economy is towards sound and stable growth with which GDP growth will reach 8.0% in 2021.





December 8, 2021
Economic Acumen
CEBI Research

The PBOC’s second RRR cut to shore up economic momentum and ensure financial stability


The PBOC announced a 50bp cut in the required reserve ratio (RRR) for financial institutions, effective Dec 15, 2021. The latest monetary easing marked the PBOC’s second RRR cut this year since July 2021, aiming at supporting the China’s economy in the wake of economic headwinds.
China’s policy makers will retain flexibility in adjusting monetary policy to lower the downside risks and stimulate growth, thus ensuring continued economic recovery. China’s economy is embedded into modest recovery path with broadening growth momentum, supported by policy stimulus, vaccine rollouts, and structural reform plans.
Prudent monetary policy remains intact to cultivate an appropriate monetary and financial environment for sustainable recovery of economic strengths.
We forecast two more RRR cuts in the first half of 2022 to enhance economic and financial support for China’s economy.





December 1, 2021
Economic Acumen
CEBI Research

Global market sentiment tumbling on the spread of Omicron Variant


The highly contagious OV poses a serious threat to the global pandemic flight and economies’ reopening-led recovery. The detection of OV triggers global alarm as governments around the globe renew travel curbs with which financial markets respond with heavy sell-off, fearing that the new strain of coronavirus could resist vaccinations and disrupt the path of economic recovery after a two-year global pandemic.
The possible large-scale spread of OV in the U.S., Europe and Asia may lead to some re-tightening of lockdown restrictions and deepened supply chain meltdown while major financial markets will continue to be shaken by the fears over fading recovery strengths.
We are of the view that potential OV’s surge along with the existing threat from the DV do inflict greater macroeconomic damage through delays in fully reopening of economies. The OV brings new headwind to the economic outlook with which the ongoing pandemic may pose larger-than-expected health and economic risks, thus enhancing volatility of capital markets for the rest of 2021.





Nov 23, 2021
Economic Acumen
CEBI Research

HK's economy encountering further rebound in 3Q2021


HK’s economy grew by 5.4% and 0.1% on year-on-year basis and adjusted quarter-on-quarter basis respectively during 3Q2021. The rise of economic activities was attributed to the strengths of recovery built upon decelerating health risks, expansion of total exports of goods and revival of consumption-related activities. Job market conditions showed improvement as unemployment rate dropped to 4.3% between August and October.
HK’s economy is still facing economic challenges in 4Q2021 and 2022 as HK confronts the threat of Delta variant (DV) alongside the renewed surge in coronavirus cases intensifying in a number of emerging and developed economies.
HK will embrace a stable pace of economic recovery in 4Q2021 and 2022 on higher vaccination rate closer to achieve towards herd immunity, expected reopening of border with mainland China and continuation of sectors’ recovery. We remain cautiously optimistic towards HK’s economy with GDP growth recovering to positive growth of 6.5% in 2021.





Nov 15, 2021
Economic Acumen
CEBI Research

China's economy embracing modest growth in October


China’s economy faced modest growth momentum in October as signs of weakness have emerged from some economic indicators under which fixed asset investment (FAI) and property investment decelerated in varying degree along with surging consumer and factory-gate price level but industrial production and retail sales rebounded on both month-on-month and year-on-year basis.
China’s manufacturing industry decelerated on pandemic-related supply chain issues. In addition, the ongoing pandemic and unstable weather conditions disrupted business operations of service sector and market sentiment for consumption, adding to the recovery headwinds on China’s economy.
Against the backdrop of surging downward pressure on the economy, China’s policy makers will retain accommodative monetary and fiscal policy stance to prop up growth momentum. We forecast that the trajectory of China's economy is towards sound and sustainable growth with which GDP growth will reach 8.0% in 2021.





Nov 12, 2021
Economic Acumen
CEBI Research

Stagflation headwinds weighing on global recovery momentum


Reopening of economies trigger faster pickup in economic activities. However, the strength of the rebound in demand has caught manufacturers by surprise and supply chains are stretched with the consequence of hiking inflation.
The global economy is moving in a stagflationary direction as growth momentum fades and price pressures accelerate. There are widespread fears that widely-expected transitory inflation hikes will turn into a persistent rise with negative repercussions for growth.
Looking forward, higher energy, labor, raw material and freight costs as well as shipment delays and disrupted logistics arrangement will last for three to six months and major economies of the world have stepped up coordinated efforts to restore the resilience of global supply chain.
We are of the view that global inflation would stick to high level in the six months and the global economic recovery is set to continue through 2022 with the pace of growth decelerating amid the complicated economic environment.





Nov 5, 2021
Economic Acumen
CEBI Research

The Fed beginning to wind down asset purchases


The Fed kept the target range of the Fed fund rates (FFR) unchanged at the record-low level near zero but announced the widely-expected tapering in its asset purchases of $15 billion per month which will begin later this month.
The Fed pointed out that the U.S. economy has maintained growing strengths. However, supply and demand imbalances related to the pandemic and the reopening of the economy enhance supply chain constraints and elevate inflation readings, adding headwinds to the recovery momentum of the U.S. economy.
The U.S. economy is recovering at a stable pace and most sectors have shown improvement in performance but have not fully recovered. Continuation of near-zero interest rate and expansionary fiscal conditions remain intact, thus supporting the U.S. economy in coming quarters.
The Fed will keep FFR until the end of 1H2022 under which the U.S. economic recovery is set to continue through 2022, but the pace of growth will be tempered by accelerated inflation and ongoing supply chain disruptions.





Oct 29, 2021
Economic Acumen
CEBI Research

Supply chain woes adding headwinds to global economic recovery


The path of global recovery remains bumpy as the spread of contagious Delta Variant (DV) renews lockdowns while many economies suffer from a shortage of raw materials, energy as well as final products.
Post-pandemic recovery plans of Governments have been disrupted under which persistent supply chain disruptions and elevated inflation readings are constraining recovery momentum of the global economy. The disruptions on manufacturers, suppliers and distributors ultimately affect consumers and economic growth.
The challenges involving higher labor, raw material and freight costs as well as shipment delays seem likely to be transitory for three to six months with which major economies of the world have stepped up efforts to restore the resilience of global supply chain.
We are of the view that the global economic recovery is set to continue through 2022, but the pace of growth will be tempered by the threat of DV and ongoing supply chain chaos.





Oct 19, 2021
Economic Acumen
CEBI Research

China's economy encountering slower growth momentum in 3Q2021


China embraced the abrupt changes in the economic environment during 3Q2021 in the wake of Delta Variant (DV) outbreak, severe flooding, supply chain disruptions, regulatory crackdown on business, energy shortage and debt problems afflicting property sector.
The growth headwinds put China’s economy embedded into a worse-than-expected YoY expansion of 4.9% YoY, staying below the consensus estimate of 5.0% and second-quarter growth of 7.9%.
China has made coordinated efforts to avoid surging downward pressure on the economy by ensuring stable power supply and normalization of production activities as well as restoring supply chain resilience. China’s policy makers will further strengthen the size of stimulus measures to prop up growth momentum and cope with volatile changes in the external environment.
We forecast that the trajectory of China's economy is towards stable and sustainable growth with which GDP growth will reach 8.0% in 2021.





Oct 15, 2021
Economic Acumen
CEBI Research

China's overseas shipments facing month-on-month slower growth momentum in September


China’s September exports posted a YoY growth of 19.9% from August’s 15.7% in Yuan terms but overseas shipments embraced month-on-month slowdown, indicating the impact of electricity shortage and logistics disruptions.
September’s imported goods cooled to rise of 10.1% YoY after a surge of 23.1% in August, reflecting cooling demand for foreign consumer products and lower demand for imported raw materials amid significant surge in prices.
Continued worldwide supply chain disruption, power supply crunch, seasonal floods and bad weather force factories to cut production, threatening to weigh on growth of external trade.
Amid the outbreak of Delta Variant (DV) curbing production in Southeast Asian countries, China emerges to be the major global production base for trading nations and foreign demand for Chinese products remains robust, thus lending support to the external trade sector for the rest of 2021.





Oct 5, 2021
Strategy Outlook
CEBI Research

4Q2021 Market and Investment Outlook
Navigating intensified market turbulence


Global investment environment continued to be complex in the third quarter as financial markets around the globe have fluctuated turbulently on rebounding economic activities, the threat of the Delta Variant (DV), normalization of easy policy stance, China’s regulatory crackdown on business, debt woes of China’s property sector and China’s power crunch.
Major cities of the world pursued normalization of work and consumption on surging rates of vaccination with which economic recovery momentum accelerated but exerted upward pressure on general price level, thus triggering fears that central banks may tighten monetary stance to prevent economies from overheating. However, the fast-spreading DV instill new uncertainties around the path to economic normalization, thus raising the concerns about economic slowdown and widening uneven recovery.
Heading into the fourth quarter, concerns circle around rising financial market risks, elevated asset valuations, overshooting inflation, worsening pandemic conditions and slowing pace of economic re-opening. In sum, more widespread vaccinations allow economies to reopen further despite the threat of DV weighing on aggregate demand. Surge in global business and consumer confidence remains intact although the health, economic and geopolitical risks still embrace recovery uncertainties. The complication of global economy paves the way for more near-term fluctuation in financial markets. The accommodative global financial conditions coupled with fiscal stimulus measures are still of paramount importance to help extend economic recovery momentum.
In general, investors are encountering the abrupt changes in the economic environment and looming market uncertainties. But we are of the view that economies will maintain proper recovery growth momentum, lending strong support to risky assets. Equity markets remain volatile in the U.S. on moderate pace of economic expansion while Hong Kong (HK) and China equity markets will recover steadily on attractive valuations. Fixed income market embraces fluctuation from bond yield turbulence on inflation fears. Forex market favors stronger dollar on the Fed’s tapering plan.





Sept 24, 2021
Economic Acumen
CEBI Research

The Fed signaling moderation in the pace of asset purchases


The Fed continued to keep the target range of the Fed fund rates (FFR) unchanged at the record-low level near zero while continuing its asset purchase program.
The Fed acknowledged the elevation of inflation during the economic recovery in post-pandemic era and the Fed Chairman signaled that if the economic progress continues to strengthen broadly, the asset purchases program will begin to scale back in the next FOMC meeting and end around June 2022 while rate hike will begin afterwards.
The recent fast-spreading DV triggers new uncertainties around the path to economic normalization and raises the concerns about slowdown of economic recovery. The ongoing health crisis poses risks to recovery momentum and employment conditions.
Keeping FFR at the floor remains as the key tool of the Fed until 3Q2022. The Fed will definitely kick off tapering in November with which gradual reduction of asset purchases will help avoid continued inflation uptick.





Sept 16, 2021
Economic Acumen
CEBI Research

China's economy embracing modest growth momentum in August


China’s economy faced a slower growth in August as there were signs of weakness emerging from major economic indicators under which fixed asset investment (FAI), industrial production and retail sales decelerated in varying degree.
China’s manufacturing industry decelerated due to pandemic-related supply chain issues as factories and ports were disrupted by outbreak of the Delta coronavirus variant (DV) and the resulting restrictions as part of government’s zero-tolerance policy of pandemic.
China’s policy makers will retain accommodative monetary and fiscal policy stance to alleviate the downside risks and stimulate growth, thus ensuring a more sustainable recovery of economic strengths.
We forecast that the trajectory of China's economy is towards sound and sustainable growth with which GDP growth will reach 8.4% in 2021.





Sept 14, 2021
Economic Acumen
CEBI Research

Mainland financial regulators kicking off “Cross-boundary Wealth Management Connect”


China’s financial regulators announced the official launch of WMC, the cross-border investment channel for wealth management products between cities in the GBA, HK and Macao.
The WMC is the first investment connect scheme specifically designed for individual investors, allowing GBA residents to make use of the convenient investment channel to invest in more diversified wealth management products across the boundary.
The scheme not only generates new business opportunities for the banking and wealth management industry, but also promotes the cross-boundary circulation and use of RMB, thereby further consolidating HK's role as the global hub for offshore RMB.
The WMC further facilitates investment and financing, expand the opening-up of the financial sector, enhance the connectivity of financial markets and financial infrastructure as well as boost innovation of the financial services, thus further deepening financial cooperation in the GBA and strengthening HK’s standing as an international financial center.





Sept 10, 2021
Economic Acumen
CEBI Research

Qianhai Plan and Hengqin Plan speeding up development of HK and Macau in the GBA


The State Council of China unveiled Qianhai Plan and Hengqin Plan to foster mainland links with Hong Kong (HK) and Macau.
The plans will enrich the implementation of "One Country, Two Systems," deepen reform and expand the scope of opening-up, and enhance the level of cooperation among Guangdong, HK and Macao, thus speeding up their integration into the Greater Bay Area (GBA).
The size, economic potential and interconnectivity of the GBA will create significant opportunities for a wide range of sectors. The GBA initiative will link the cities by leveraging their collective strengths through coordinated efforts for economic cooperation and financial support to build a dynamic and internationally competitive first-class bay area.
The promulgation of both plans will further enhance HK-Shenzhen and Macao-Zhuhai cooperation under which the four cities can serve as high-quality growth engines to drive the future expansion of the GBA and integrate into the overall national development plan of China.





Sept 6, 2021
Economic Acumen
CEBI Research

Nurturing more high-quality SMEs through Beijing Stock Exchange


China's President Xi Jinping has announced the establishment of the Beijing Stock Exchange (BSE) as the primary platform serving innovation-oriented small and medium-sized enterprises (SMEs). It aims to deepen reforms of the "new third board," officially known as the National Equities Exchange and Quotations (NEEQ).
The BSE will be built on the basis of the existing NEEQ "selected-layer" with various system innovations attracting a group of high-quality SMEs to list for trading.
The BSE would help strengthen financial supply-side structural reforms and improve capital market systems. China aims to make BSE a nationwide model of high-quality development in supporting and nurturing SMEs.
The establishment of a new exchange in Beijing will be a significant push for improving capital market functions, promoting the integration of technology and capital, and supporting the innovative development of SMEs.





Sept 1, 2021
Economic Acumen
CEBI Research

Global accommodative monetary conditions propelling economic recovery momentum


Global central banks pledge to support the economic recovery by setting a higher bar for rate hikes with which ultra-low interest rate environment remains intact for longer duration.
The Chairman of the Fed, Jereme Powell, hinted in his recent Jackson Hole address that the Fed may lay out the schedule of tapering monthly asset purchases this year but it should not be interpreted as a sign that rate hikes would follow soon. That implies the target range of the Fed fund rates (FFR) stays unchanged at the record-low level near zero for longer time to strengthen global recovery momentum.
The highly contagious DV has been reported around the world, posing a serious threat to the global pandemic flight and economic recovery in 2H2021. We are of the view that prolonged uncertainties regarding the control of the coronavirus epidemic weigh on growth recovery momentum.
In the wake of complicated economic and health environment, central banks and governments continue to retain loose monetary and fiscal conditions to strengthen revival of global economic activities.





Aug 23, 2021
Economic Acumen
CEBI Research

HK's economy embracing steady recovery in 2H2021


HK economic activities rebounded by 7.8% YoY with which improvement of the local epidemic conditions generated robust GDP growth of 8.0% and 7.6% in 1Q2021 and 2Q2021.
The level of rebound in economic activities was uneven with which surging exports were the major push for growth uptrend but other major growth drivers including consumption and investment were embedded into mild rebound amid disruption of domestic and cross-border activities.
HK’s economy is still facing economic challenges in 2H2021 as HK recently confronts the emergence of Delta variant. Although new infected cases in HK are at low level, the Government remains cautious by maintaining existing social distancing rules to avoid the spread of DV.
The distribution of electronic vouchers worth HK$5,000 to permanent residents helps sustain economic recovery while the swift rollout of coronavirus vaccines will speed up economic rebound in coming months
We remain cautiously optimistic towards HK’s economy with GDP growth recovering to positive growth of 6.5% in 2021.





Aug 16, 2021
Economic Acumen
CEBI Research

China's economy demonstrating slower growth momentum in July


China’s economy embraced a slower growth in July as major economic indicators demonstrated weaker-than-expected growth momentum with which fixed asset investment (FAI), industrial production, retail sales and external trade decelerated in varying degree. July survey-based urban unemployment rate increased to 5.1% from June’s 5.0%, reflecting worsened conditions of job market.
The recent Politburo has warned the pace of economic recovery would likely moderate in the second half of 2021 as the recent spread of ‘Delta’ coronavirus variant (DV) along with complex external economic environment endanger the outlook of domestic recovery.
Bad weather along the latest coronavirus controls pose growth headwinds for 2H2021 and China’s policy makers remain cautious to handle economic fluctuations by exercising appropriate economic policies to withstand economic uncertainties.
Looking forward, macroeconomic policy support are on track to alleviate the downside risks and stimulate growth, thus ensuring a more sustainable recovery of economic strengths. We forecast that the overall macroeconomic conditions of China remain stable with which GDP growth will reach 8.4% in 2021.





Aug 9, 2021
Economic Acumen
CEBI Research

China’s external trade embracing slower-than-expected growth momentum in July


China demonstrated slowdown in July’s exports on the back of worsening pandemic conditions driven by Delta Variant (DV) and slowing factory activities due to seasonal floods and bad weather, thus posting a slower growth momentum of 8.1% YoY in Yuan terms, which stayed below the consensus estimate of 9.6% and June’s 20.2%.
July’s imports cooled to 16.1% YoY after a surge of 24.2% in June, which stood below the consensus estimate of 21.9%. The deceleration of imports was mainly due to moderation of industrial production due to higher raw material costs, uncertain economic conditions and extreme weather.
China’s major trading partners are under the threat of DV and surging commodity prices, which not only hit the demand for China's exports, but also damage the supply of raw materials and intermediate components.
Major cities re-imposing lockdown measures to fight against the spread of DV disrupt the global supply chain with which Chinese exporters struggle with an ongoing global semiconductor shortage, logistics bottlenecks, and higher raw material and freight costs.
China’s overall trade growth could face slower momentum in coming months but will maintain modest growth for the rest of 2021.





Aug 2, 2021
Economic Acumen
CEBI Research

The Fed moving closer to wind down asset purchases


The Fed continued to keep the target range of the Fed fund rates (FFR) unchanged at the record-low level near zero while continuing its asset purchase program at least at the current pace of USD 120 billion per month.
Although the Fed did not lay out the schedule of tapering asset purchases during the FOMC meeting, the Fed Chairman Jerome Powell hinted that strong job market numbers in coming months will likely push forward the discussion of pulling back bond-buying program.
The recent fast-spreading Delta variant (DV) of Coronavirus instill new uncertainties around the path to economic normalization as the rebound in infected cases raise the concerns about slowdown of economic recovery.
It is still a long way for the U.S. economy to reach full employment level and keeping FFR at the floor until 2022 remains as the key tool of the Fed. It is expected that the Fed will disclose tapering timeline during the next FOMC meeting in September with which gradual reduction of asset purchases will kick-start in 4Q2021 to avoid continued inflation overshooting.





July 26, 2021
Economic Acumen
CEBI Research

The fast-spreading Delta variant clouding global recovery outlook


The highly contagious DV has been reported around the world, posing a serious threat to the global pandemic flight and economic recovery in 2H2021.
The spread of more coronavirus in the U.S., Europe and Asia has led to some re-tightening of lockdown restrictions and major financial markets were shaken by the fears over fading recovery strengths in July while US treasury yields hit the lowest since February 2021. We are of the view that prolonged uncertainties regarding the control of the coronavirus epidemic weigh on growth recovery momentum.
In the wake of complicated economic and health environment, global central banks and governments point to strengthen the accommodative stance of economic tools with which continuation of loose monetary and fiscal conditions remain intact, thus supporting revival of economic activities and ensuring soft-landing of global economy in 2H2021.





July 15, 2021
Economic Acumen
CEBI Research

China's economic strength sustained in 1H2021


China’s economy embedded into slower year-on-year growth of goods and services during 2Q2021 on a high base effect, with GDP rising at 7.9% YoY (1.3% QoQ), which stayed below the consensus estimate of 8.0%. For the first half of 2021, China’s economic growth posted a rise of 12.7% YoY, against 1H2020’s -1.6% and 2020’s 2.3%.
China’s economy remains strong on achieving the great progress in economic recovery with which the economy grows with more emphasis on quality and efficiency. China’s policy makers remain cautious to handle economic fluctuations by exercising appropriate economic policies to withstand economic uncertainties arising from the recent spread of ‘Delta’ coronavirus variant worldwide and surging commodity prices.
The latest 50bp cut in RRR signaled that the PBOC will further strengthen monetary tools to prop up growth momentum and cope with volatile changes of the external environment in 2H2021.
We forecast that the overall macroeconomic conditions of China remain sound and stable with which GDP growth will reach 8.4% in 2021.





July 12, 2021
Economic Acumen
CEBI Research

The PBOC’s 2021 first RRR cut to underpin recovery momentum


The PBOC announced a 50bp cut in the required reserve ratio (RRR) for financial institutions, effective July 15, 2021. The move will unleash around RMB 1 trillion worth of liquidity into the banking system to guide lenders to expand loan books and lower financing costs. The cut would be the first since April 2020 when the economy was hampered by the coronavirus pandemic.
China’s economy has largely recovered from the pandemic-driven slowdown through the implementation of countercyclical monetary and fiscal policy to prop up economic growth. However, the recent spread of ‘Delta’ coronavirus variant worldwide and surge in commodity prices have exacerbated economic uncertainties regarding the recovery momentum in 2H2021.
The latest RRR cut will help support the real economy and stabilize financial markets, thus strengthening efforts to maintain sustainable growth momentum.
We forecast one more RRR cut before the end of 3Q2021 is needed to enhance financial support for China’s economy.





July 9, 2021
Economic Acumen
CEBI Research

Navigating uptrend of oil prices


Crude oil prices have recovered strongly, driven by firming demand and continued production restraint by Organization of the Petroleum Exporting Countries and its allies (OPEC+).
Looking into the second half of 2021, direction of oil prices hinges on the recovery momentum of global economic activities through proper vaccination and OPEC+ oil output policy decision.
We are of the view that the latest cancelation of scheduled meeting of OPEC+ dashed hopes for an agreement of oil-output boost to satisfy surging oil demand, thus lifting further gains in oil prices.
Demand-side recovery in oil market remains intact for the rest of 2021 but the growth momentum will slow amid robust rise of oil prices in 1H2021, the spread of ‘Delta’ Coronarvirus variant worldwide exacerbating concerns of a setback in oil demand, possible Iranian crude oil exports returning to the global oil market as well as possible inflation hikes affecting global economic growth.
We forecast crude oil prices will soar gradually between USD $75 and $85 per barrel.





July 2, 2021
Strategy Outlook
CEBI Research

3Q2021 Market and Investment Outlook
Market rebalancing on fears of rising inflation


Financial markets around the globe have rallied turbulently on the anticipation of a sharp rebound in economic activities and corporate earnings during the second quarter of 2021. Global aggregate demand for goods and services rose at an accelerated pace, thus enhancing physical demand and prices of commodity and exerting upward pressure on general price level. Inflation expectations have spiked dramatically with the fear that policymakers may tighten easy monetary stance to prevent economies from overheating.
Heading into the third quarter, more widespread vaccinations allow economies to open on boarder scale. Surge in global business and consumer confidence remains intact although the health, economic and geopolitical risks still embrace recovery uncertainties. It is foreseeable that the complication of global economy driven by several new strains of the coronavirus and rising energy prices paves the way for near-term fluctuation in financial markets.
In general, investors are encountering an environment of renewed growth with rising inflationary pressures. Global economy is heading towards a more broad-based growth path. We are of the view that economies will restore stronger growth on proper vaccinations with which robust economic and corporate earnings growth has been priced in by the equity market for a good portion of rally.
Equity markets remain volatile in the U.S. after a bullish run in 1H2021 while Hong Kong (HK) and China equity markets will outperform on steady growth rebound in coming quarters. Fixed income market embraces fluctuation from the turbulence of bond yield on inflation fears. Forex market favors stronger dollar on hawkish shift in the Fed’s policy.





June 21, 2021
Economic Acumen
CEBI Research

The Fed projecting earlier rate hikes


The U.S. Federal Reserve (the Fed) voted to keep the target range of the Fed fund rates (FFR) unchanged at the record-low level near zero while continuing its asset purchase program at least at the current pace of USD 120 billion per month.
The Fed pointed out that the U.S. economy has demonstrated growing strengths, thus reflecting solid economic recovery along with rising inflation pressures. The Fed’s officials also signaled interest rate hikes by late 2023.
The health crisis continues to pose risks to recovery momentum and employment conditions which drive the Fed to maintain super-easy monetary stance. The near-term outlook for inflation suggests a temporary spike, reflecting an adjustment higher in price level as the global economy recovers from the severe economic shocks of the pandemic.
We are of the view that the U.S. economy is still a long way from the goal of achieving full employment and keeping FFR at the floor until 2022 remains as the key tool of the Fed. But in light of strong economic indicators and employment conditions, the Fed may begin to scale back the bond-buying program as early as 4Q2021 in an attempt to avoid permanent inflation uptick.





June 17, 2021
Economic Acumen
CEBI Research

China's economy maintaining stable uptrend in May


China’s economy showed a steady improvement in May as major economic indicators continued to demonstrate growth momentum. Major economic indicators braced for extended growth recovery as fixed asset investment (FAI), industrial production, retail sales and external trade accelerating in varying degree while May survey-based urban unemployment rate dropped to 5.0% from April’s 5.1%, reflecting the improvement of job market.
China's economy has been transitioning from a phase of rapid growth to a stage of high-quality development which help build a modernized economy. The economy is embedded into upbeat recovery path with broadening growth momentum, which is driven by the steady pick-up in domestic consumption and investment in infrastructure as well as export booms.
In general, China’s economic recovery is becoming broader and more sustainable and the overall macroeconomic conditions of China remain solid. The recent recovery trend will continue throughout the year and we forecast China’s economy will expand by 8.4% YoY in 2021.





June 9, 2021
Economic Acumen
CEBI Research

China’s consumer inflation picking up in May


China's consumer price index (CPI) edged up on year-on-year basis in May at 1.3% from April’s 0.9%, staying below the consensus estimate of 1.6%. May’s CPI uptrend was mainly driven by continued increase in domestic labor costs and energy prices.
China's producer price index (PPI) accelerated by 0.9% YoY in May from April’s 6.8%, exceeding the consensus estimate of 8.5%. May’s factory gate prices rose at their fastest pace since 2008 due to rally in international commodity prices.
In sum, the recent pickup in consumer and producer prices signaled surging inflationary pressures, which create risks for macroeconomic adjustments to slow economic momentum.
Looking forward, pent-up demand for services will strengthen the recovery of consumer and factory prices in coming months. We are of the view that the People Bank of China (PBOC) will maintain prudent monetary policy with flexibility to ensure proper growth of economic activities and financial market stability, thus providing the support needed for China’s continued economic recovery in 2021.





June 3, 2021
Economic Acumen
CEBI Research

Navigating turbulent rally of renminbi


Renminbi has strengthened on continuing basis since April 2021, with appreciation of more than 2% YTD against the U.S. dollar in 2021.
Rising signs of herding behavior in China’s foreign exchange market have attracted the public attention, warning against the rapid appreciation due to sizable speculative trading as renminbi hit a three-year high against the dollar and a five-year high against a trade-weighted basket of currencies, raising concerns that continued hot money inflows will lead to formation of asset bubbles.
In response to unhealthy rally of renminbi, the People Bank of China (PBOC) raised the reserve requirement for banks’ foreign exchange deposits to 7% from 5% in an attempt to reduce market’s dollar liquidity and in turn stabilize renminbi against the dollar. In sum, the latest PBOC’s move is to restore the stable path of currency appreciation, thus strengthening foreign exchange liquidity management for financial institutions.
We are of the view that the move will have temporary effect to curb the upside of renmimbi but will not alter medium and long-term appreciation trend. Renminbi will stay well-supported between 6.25 and 6.35 per USD for the rest of 2021.





May 27, 2021
Economic Acumen
CEBI Research

Recovery optimism growing despite fears of rising inflation


Fears are growing that global economic revival and pandemic-induced fiscal stimulus measures will lead to surging inflation as the U.S. consumer prices in April rose at their highest level in more than a decade while China faced a sharper–than-expected jump in April’s producer price inflation. Upward pricing pressures cast a cloud over the sustainability of global economic recovery.
Inflation expectations have spiked dramatically in recent weeks with the fear that policymakers may tighten easy monetary stance to prevent economies from overheating.
We are of the view that the U.S. Federal Reserves (Fed) will maintain flexible average inflation targeting to tolerate inflation staying above 2% in coming months. The current uptrend of inflation is transitory due to low-base effect and activities’ normalization, reflecting that the U.S. economy is on track for a faster recovery but still a long way from the goal of achieving full employment.
We believe the Federal Fund Rate (FFR) at the floor remains as the key tool of the Fed in 2021 and it is likely that initial pullback of bond purchases will begin in the fourth quarter of 2021.





May 18, 2021
Economic Acumen
CEBI Research

China’s economy gathering recovery strength in April


After experiencing a soaring growth of 18.3% in the first quarter, China’s economy continued to gather strength as major economic indicators demonstrated upbeat growth momentum in April. Major economic indicators braced for expansion as fixed asset investment (FAI), industrial production, retail sales and external trade maintained strong growth in varying degree while April survey-based urban unemployment rate dropped to 5.1% from March’s 5.3%, reflecting the continued improvement of job market.
China’s economy is embedded into robust recovery path with broadening growth momentum, which is driven by massive investment in infrastructure, export booms boosted by the strong global demand for medical supplies, medical equipment, and electronics, as well as the steady pick-up in domestic consumption.
China’s economic recovery is becoming broad more sustainable. Overall macroeconomic conditions of China remain solid and the current recovery trend will continue throughout the year. We forecast China’s economy will expand by 8.4% YoY in 2021.





May 5, 2021
Economic Acumen
CEBI Research

HK’s economy embracing rebound in 1Q2021


Entering 2021, HK’s economy rebounded by 7.8% YoY in the first quarter on improvement of the local epidemic situation, beating the consensus estimate of 3.7% and reversing straight six quarters of contraction. Nevertheless, the level of economic activities was still notably below the pre-pandemic level.
HK’s economy is still facing economic challenges in coming quarters as HK recently confronts the emergence of coronavirus variants in April-May along with renewed surge in coronavirus cases intensifying in a number of emerging market and developed economies.
HK’s economy will brace for an uneven pace of recovery in the first half of 2021 due to low vaccination rate which is far from achieving towards herd immunity and full activities’ normalization. Further easing pressure of the pandemic along with rising rate of vaccination are expected in the second half, which will speed up growth momentum. We remain cautiously optimistic towards HK’s economy with GDP growth recovering to positive growth of 7.2% in 2021.





April 29, 2021
Economic Acumen
CEBI Research

The Fed signaling more optimism on recovery momentum


The U.S. Federal Reserve (the Fed) voted to hold the target range of the Fed fund rates (FFR) unchanged, at 0% to 0.25% as well as maintain the purchases of at least $80 billion of Treasury bonds and at least $40 billion of mortgage-backed securities per month.
The Fed points out that major economic indicators have demonstrated strengths, thus reflecting solid recovery of the U.S. economy. Even though inflation risks are on the rise, the ongoing health crisis continues to pose economic risks to the U.S. economic outlook and the Fed pledges to maintain the accommodative stance with the aim to support a proper revival of economic growth.
Looking forward, accelerating vaccination rollout in the U.S. is expected to lower health risks and push for a stronger economic rebound. Proactive monetary stance of the Fed and sizable fiscal expansion through pandemic-relief package and new infrastructure stimulus package will enhance recovery momentum, thus brightening the economic outlook for 2021 and 2022.





April 16, 2021
Economic Acumen
CEBI Research

China’s economy embracing upbeat momentum in 1Q2021


Building upon the strengths of economic recovery and low-base activities during the first quarter of 2020 due to pandemic–driven economic contraction, China’s economic growth rebounded strongly by a double-digit growth of 18.3% YoY in 1Q2021, staying below the consensus estimate of 18.5% but significantly higher than 4Q2020’s 6.5%.
China’s economic indicators demonstrated an uptrend both in March and 1Q2021, with growth of fixed asset investment (FAI), industrial production, retail sales and external trade accelerating in vary degrees.
China is firmly on a robust recovery path by broadening growth momentum. The economic vision under 14th Five-Year Plan (FYP) strengthening high-quality growth, reining in carbon emissions, and improving energy efficiency should support China to rebalance its growth model towards greener and more consumption-oriented growth.
China’s economy is expected to grow at a solid pace in 2021, on the back of ongoing domestic and global recovery. The prompt rebound through pickup in investment, consumption and exports will prop up economic growth of China to 8.4% in 2021.





April 9, 2021
Research report
Company Research

Vobile Group Limited (3738.HK)
Stronger-than-expected mainland business; Raised TP to HK$34


Revenue in 2020 increased 133.6% YoY. Vobile Group announced its 2020 results on March 31. Revenue of the company increased by 133.6% YoY to USD 43.9 million. Gross profit was approximately USD 21.3 million with an increase of around USD 7.8 million as compared to approximately USD 13.5 million in 2019. The profit attributable to the owners of the company was USD 10.5 million, as compared to approximately USD 6.2 million loss in 2019.
Revenue of SaaS business increased by 378.6% YoY. The company mainly uses the SaaS business model to deliver products and services. The subscription-based SaaS business generated USD 13.73 million in revenue for last year, with a YoY increase of 10%. Transaction-based SaaS business revenue was USD 30.146 million, with a YoY increase of 378.6%.
The company entered into strategic cooperation agreements with three leading industry participants. 1) Entered into a business cooperation agreement with Ant Group Co., Ltd. The company will be the online video and audio content protection technology supplier for a digital copyright service platform operated by AntChain and will provide online copyright management and monetization services for the platform overseas. 2) Entered into a new media copyright management and monetization services agreement with Wasu Media Networks Co., Ltd., 3) Entered into a strategic business collaboration agreement with Guangdong Advertising Group Co., Ltd.
Announced a business cooperation agreement with E-Surfing Media. On April 7,the company signed a business collaboration agreement with E-Surfing Media to establish a copyright protection and transaction platform as well as to provide video content copyright distribution via revenue sharing model. E-Surfing Media is the only online video operation platform of China Telecom, and this cooperation reflects the company is accelerating the business development in Mainland China.
Raised Target Price to HKD34; Maintain Buy. We believe that the business of content realization still has a lot of room for growth in the future. We expect the revenue of 2021 and 2022 to reach USD 83.84 million and USD 133 million respectively, with a YoY growth of 91% and 59%. The profit of 2021 and 2022 is expected to reach USD 13.54 million and USD 20.21 million respectively, with a YoY growth of 29.2% and 49.2%. We raise the target price to HKD 34,based on 55x 2022E EV/EBITDA and 14x 2022E PS ratio.
Risk factors: 1) High concentration in the U.S. market, 2) Inability to expand to the Chinese market, 3) The pressure for lower gross profit margin is higher than our expectation, 4) More fierce competition in the industry.





April 9, 2021
Economic Acumen
CEBI Research

Global growth gaining upward momentum despite uneven recovery


In view of the coronavirus pandemic across the world, the global economy faced a loss of growth momentum in 2020. The complication of worldwide health and economic environment created short-term economic turbulences with which global activities contracted by 3.3% in 2020.
Entering 2021, global economic growth demonstrates signs of rebounding from 2020’s trough at an uneven momentum across different countries due to varying health, economic and political environment in different continents.
Two biggest economies of the world lift global growth expectations in 2021. International Monetary Fund (Fund) just releases the economic forecasts by raising global growth from January projection of 5.5% to 6.0% in 2021 with which the U.S. and China will grow by 6.4% and 8.4%.
Although Eurozone, Japan and developing economies have embedded into slower recovery, the global economic recovery is gaining more traction on alleviation of global health risks by accelerating vaccines rollout, thus brightening economic outlook in 2021.





April 1, 2021
Strategy Outlook
CEBI Research

2Q2021 Market and Investment Outlook
Navigating a world of reflation


First quarter of 2021 witnessed ups and downs in financial markets. As the steady progress of vaccinations around the globe helped flatten the coronavirus infection curve, major cities of the world began to lift the containment measures and pursue resumption of work and consumption. Growing risk appetite triggered the bull run of global equities in February and early March in response to accelerated global economic recovery in coming quarters. However, the easy-money-driven pent-up demand for goods and services contributed to renewed inflation risks along with sliding high-flying technology stocks, which triggered the correction of global stocks markets when getting close to the end of March.
After months of economic shocks, the global economy finally showed signs of entering the early stage of recovery. Heading into the second quarter of 2021, investors are encountering an environment of renewed growth and improving fundamental conditions with increased inflationary pressures. The global economy is still fragile, adding urgency for the continued policy support to rekindle growth momentum. The complication of global economy paves the way for fluctuating growth recovery and more turbulences in financial markets.
In general, investors are encountering an environment of renewed growth and improving fundamental conditions with increased inflationary pressures. We are of the view that economies will stabilize further on proper vaccinations. Equity markets remain volatile in the U.S. amid relative expensive valuations while Hong Kong (HK) and China equity markets will outperform on stronger growth rebound in coming quarters. Fixed income market continues to embrace fluctuation from the turbulence of bond yield. Forex market favors strengthening U.S. dollar amid narrowing yield differentials.





March 22, 2021
Economic Acumen
CEBI Research

The Fed keeping interest rate near zero to unleash economic boom


At the conclusion of the second Federal Open Markets Committee (FOMC) policy meeting in 2021 on 17th March, the U.S. Federal Reserve (the Fed) voted to left the target range of the Fed fund rates (FFR) unchanged, at 0% to 0.25% and continue to increase its holdings of Treasury securities.
The Fed points out that major economic indicators have demonstrated growing strengths, thus reflecting the pickup in solid economic recovery and triggering steadily rising inflation expectations.
The current uptrend of inflation is transitory with which the economy is still a long way from the goal of achieving full employment and keeping FFR at the floor until 2023 remains as the key tool of the Fed.
We are of the view that accelerating vaccination rollout in the U.S. is expected to lower health risks and drive an economic rebound as pent-up spending is unleashed. The clear monetary stance of the Fed and new fiscal stimulus package under Biden’s Administration will add recovery momentum into the U.S. economy, thus brightening the economic outlook for 2021 and 2022.





March 8, 2021
Economic Acumen
CEBI Research

China’s 2021 NPC: bracing for high-quality growth


The goal of revitalizing growth momentum for China’s economy to achieve full employment and sustainable growth becomes the major emphasis of China’s 13th National People's Congress (NPC) in 2021.
China’s economic activities experienced cooling strengths in 2020 but the economy has largely recovered from the pandemic-driven slowdown, thus becoming the only major nation in the world to achieve positive economic growth.
Looking forward, the 14th Five-Year Plan (FYP) will lay the foundation for China to step into an era of a modern nation amid mounted external uncertainties. China aims to liberalize the economy and pursue quality growth through proper macroeconomic policy supports to foster a balanced and sustainable development.
We are of the view that China’s economy demonstrates signs of strong rebound and the forward-looking economic indicators point to a solid growth in domestic demand. We forecast GDP growth for 2021 will reach 8.2% in 2021.





February 25, 2021
Economic Acumen
CEBI Research

HK embedded into fiscal deficits for the next five years


In the midst of economic shocks triggered by the outbreak of coronavirus, Hong Kong (HK) Government spent a total of over HK$300 billion to cushion the blow to the economy by relieving the people's burden, supporting enterprises, safeguarding jobs and stimulating economic activities.
For fiscal year (FY) 2020/21, HK recorded the highest projected deficit of HK$257.6 billion in its history, reflecting the impact of economic stagnation on government fiscal conditions.
The threat of coronavirus pandemic and austere labor market conditions continue to weigh on the recovery momentum in 2021. The latest budget retains sizable HK$120 billion counter-cyclical fiscal measures to prop up growth recovery of HK’s economy with which HK Government forecasts budget deficits for the next five years, with an estimated HK$101.6 billion for FY2021-22.
We are of the view that HK’s economy will embrace a slow-motion economic growth in the first half of 2021 due to tight supply of effective vaccines affecting the speed of activities’ normalization while expected easing pressure of the pandemic in the second half will revive faster growth momentum. We remain cautiously optimistic towards the recovery of HK’s economy with GDP returning to positive growth of 3.2% in 2021.





February 10, 2021
Economic Acumen
CEBI Research

China’s MoM consumer inflation surging in January


China's consumer price index (CPI) accelerated on month-on-month basis (MoM) in January at 1.0% from December’s 0.7% although general price level posted mild deflation of 0.3% YoY, which was below the consensus estimate of 0% YoY and December’s +0.2%. January’s CPI uptrend was mainly due to monthly increase in food price by 4.1%, surpassing 2.8% in December with which growing consumer demand for food during the upcoming Spring Festival, rising production costs and special weather conditions were the major factors to push up prices of food including meats, vegetables and fruits.
The producer prices index (PPI) restored positive year-on-year growth by 0.3% in January along with MoM increase of 1%, staying in line with the consensus estimate but better than December’s -0.4% YoY. Reversal of factory prices reflected the steady recovery in industrial activities amid economic rebound of China’s economy.
The rise of January’s consumer and industrial prices signaled stable inflationary pressures, which creates favorable conditions for macroeconomic adjustments to shore up economic growth. A continuously low inflation would ease the concern of ample liquidity to push up inflation, therefore supporting the flexible monetary policy in supporting economic recovery.





February 1, 2021
Economic Acumen
CEBI Research

The Fed maintaining accommodative financial conditions to foster economic recovery


At the conclusion of the first Federal Open Markets Committee (FOMC) policy meeting in 2021 on 27th January, the U.S. Federal Reserve (the Fed) voted to left target range of the Fed fund rates (FFR) unchanged, at 0% to 0.25%.
The Fed points out that the evolving pandemic continues to weigh on economic activities, employment conditions and inflation, thus posing considerable risks to the economic outlook of the U.S. economy in 2021. The super-easy monetary policy remains as the main tool of the Fed to navigate a world of persistently low interest rates and a massive bond-buying program in an attempt to avoid potential drag on economic growth.
The U.S. economy that got hammered by coronavirus pandemic is heading towards an uneven revival of economic momentum as recent surge in infection cases and renewal of restrictions in many states may limit economic growth during the first half of 2021.
We are of the view that a full rollout of new coronavirus vaccines is expected to lower health risks, thus restoring normalization of work and consumption. The clear monetary stance of the Fed and fiscal stimulus package under Biden’s Administration will add rebounding momentum into the U.S. economy and effective vaccinations will further strengthen the recovery path in the second half of 2021.





January 29, 2021
Economic Acumen
CEBI Research

Renminbi soaring on China’s growth resilience


Renminbi has strengthened on continuing basis since June 2020 alongside China’s rapid economic recovery from economic shocks caused by the coronavirus pandemic, thus gathering strengths against the U.S. dollar (USD) with appreciation of above 6% in 2020 and YTD 0.7% in 2021.
Supportive growth momentum of China’s economy, resilient exports and interest rate premium over major economies are the major driving forces for a strong renminbi. Amid the return to positive GDP growth and launch of more targeted foreign direct investment facilitation program, China overtook the U.S. as the largest recipient of foreign direct investment in 2020, thus supporting the upward trend of renminbi.
Looking ahead, solid fundamentals for renminbi are likely to be extended into 2021. Although uncertainty over the evolution of the pandemic and US-China economic relationships under Biden’s administration remain as the major risks to defuse the uptrend of renminbi, China’s economic recovery out of the epidemic outbreak has been relatively swift and resilient economic fundamentals lend great support to continued strength of renminbi, which will stay well-supported between 6.3 and 6.4 per USD in 2021.





January 18, 2021
Economic Acumen
CEBI Research

China's economy maintaining expansion in 2020 despite the pandemic rampaging the world


Amid the outbreak of coronavirus pandemic, China’s economic activities faced cooling strengths in 2020 as the economy embedded into growth of 2.3%, staying below 2019’s 6.0% but above the consensus estimate of 2.1%.
On quarterly basis, economic recovery was gaining traction as 4Q2020’s GDP growth grew by 6.5% YoY, staying better than the consensus estimate of 6.2% and above 3Q2020’s 4.9%.
China’s economy has largely recovered from epidemic shocks through effective control of the pandemic and the implementation of countercyclical monetary and fiscal policy to prop up economic momentum. The early exit from the pandemic offers China with competitive advantage to resume production and consumption, thus becoming the first major economy to recover from deep slump in economic activities and experiencing the V-shaped recovery path.
Looking forward, the economic vision under 14th Five-Year Plan (FYP) puts a heavy emphasis on sustainable growth strategy. China’s macroeconomic conditions remain sound and we forecast China’s GDP growth will reach 8.2% YoY in 2021.





January 13, 2021
Economic Acumen
CEBI Research

Demand recovery reshaping oil market in 2021


Coronavirus-led disruptions to economic activities have had caused an unprecedented impact on worldwide oil demand in 2020. Plummeting oil demand due to lockdown of cities and stoppage of transports triggered severe plunging of oil prices in March and April but sharp reduction in oil production rebalanced oil market dislocation, thus reversing downward trend and lending great support to prices.
Entering 2021, direction of oil prices hinges on the recovery momentum of global economic activities through the effective control of coronavirus pandemic by vaccination. In sum, the pandemic is still rampaging most of countries in the world and the prospect of sluggish demand recovery has prompted OPEC+ to slow the pace of scheduled oil-output boost, thus providing strong support for WTI oil futures to stay above USD $50 per barrel, first time since February 2020.
We are of the view that crude oil prices start to enter into a period of stabilization between $50 and $60 per barrel. It is expected that oil prices will pursue upward trend by witnessing less volatilities and fluctuations on strengthening global recovery momentum in the second half of 2021.





January 6, 2021
Economic Acumen
CEBI Research

Cautious optimism surrounding global equity markets in 2021


Despite the persistence of coronavirus pandemic in 2020, global stock markets have been driven higher by expectations of an accelerated recovery and continued monetary easing. The upbeat momentum of equities has been impressive as Dow, S&P 500, NASDAQ and Nikkei posted YoY growth of 7.2%, 16.3%, 43.6% and 16% while Shanghai composite index and Shenzhen component index outperformed by soaring 13.9% and 38.7%.
Entering 2021, global economic growth is expected to rebound from 2020’s trough at an uneven momentum across different countries. Strengthening hopes of vaccination for medical solutions to the pandemic and recovering economic momentum buoy market sentiments.
Although the sustainability of recovery growth momentum remains uncertain due to the effectiveness of vaccines and risks of having a new wave of the pandemic, policy supports through massive stimulus packages boost global liquidity, thus triggering significant buying interests in risky assets. We are of the view that the global economic recovery is gaining more traction to enhance investors’ optimism, thus extending equity market rally in 2021.