China’s economic growth momentum may have bottomed out, government to step up policy support – UBS
MACRO MARKET VIEWS & ANALYSIS
China’s economic growth momentum may have bottomed out, government to step up policy support – UBS
MACRO MARKET VIEWS & ANALYSIS

China’s economic growth momentum may have bottomed out, government to step up policy support – UBS

 

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China’s economic growth improved in August, beating market expectations, and the growth momentum may have bottomed out, said Wang Tao, Chief China Economist at UBS. 

China’s quarterly GDP growth is expected to bottom out in the third quarter and rebound in the fourth quarter and the forecast of real GDP growth in 2023 is kept unchanged at 4.8%, she said, adding that how the real estate down cycle evolves and the extent and pace of policy easing remain the biggest uncertainties for future economic growth.

Policy support is expected to step up going forward and there is need for further monetary and credit easing to complement the housing and fiscal policy easing, including a further 10 – 15 bps cut in the policy rate and support for a modest rebound in credit growth to 9.6% by the end of 2023, she said.

The market may have bottomed out, with some of the best-performing sectors including the internet and various consumer sub-sectors such as food and beverage, leisure and beer, and UBS has built its portfolio around the sectors, but also includes highways stocks, which are deemed defensive, she said. UBS’s least favourable sectors remain airlines, banking, materials and automobiles.