Key Risk for Chinese A-Shares in 2018 is GDP Falling Short of Forecasts

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Leading domestic analysts point to tighter monetary policy and GDP growth falling short of forecasts as one of the key risk areas for the Chinese share market in 2018.

Ma Cheng (马澄), chairman of Juze Investment, said to Simuwang that two of the main risks for both the Chinese and global economies in 2018 would be tightening of monetary policies in excess of forecasts, such as US Fed rate hikes or balance sheet reductions, and China’s economic data falling markedly short of expectations, such as GDP growth posting a sizeable decline.

According to Ma investors in Chinese stocks should focus on fundamentals and broader price trends given the tightening regulatory environment.

Ma also points out that given Beijing’s drive to accelerate the creation of a more innovative economy, investors should focus on tech stocks in areas including 5G applications, the Internet of Things, artificial intelligence and semi-conductors.

Pan Chenxing (潘晨兴), fund manager for Yingling Group, also believe that the biggest uncertainty for 2018 will be China’s economic growth falling short of forecasts.

According to Pan external demand and supply-side structural reforms led to improvements in China’s economic performance in 2017.

Pan points out, however, that a number of factors could impede the future performance of Chinese A-shares, including high risk-free interest rates, tightening of monetary policy, and uncertainty surrounding inflation.

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