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The CPC Politburo meeting’s messages on supporting economic growth, promoting private sector investment and boosting investor confidence were generally favourable to market sentiment, bringing broadly positive signals as the market’s earlier policy expectations were relatively modest, UBS said in a note.
However, investors would likely need to see a more detailed implementation plan before taking action, it said.
The broker remained optimistic about the outlook for the MSCI China Index, and favoured sectors including Internet, major appliances, beer, sportswear, leisure and insurance.
The State Council has laid a positive tone for private companies as it outlined the need to promote a better business environment and accelerate cash payments to them, and meanwhile, the intention to promote the healthy development of the digital and platform economy continues to reinforce the bank’s top preference for the Internet sector, the bank said.
News on boosting consumption in major items such as autos, electronics and household goods, as well as sports and entertainment spending, was also reassuring, it said. While consumption recovery may lag behind the broader economic recovery, the broker continued to see attractiveness in specific consumer sectors on the mainland, given subdued valuations.
The absence of any further mention of “housing for living, not for speculation”, which could potentially be bullish for the real estate sector, and at the same time, the authorities’ plan to increase international flights is potentially positive for outbound travel-related industries, while their promotion of developing advanced industries, such as AI, would benefit advanced manufacturing, software, and other AI-related sectors.