Chinese offshore stocks and A-shares slated to perform well in 2018

Chinese offshore stocks and A-shares are both expected to perform well in 2018, according to Robeco, an international asset manager.

The company revised the profit forecast for A-share investors higher to 22.4 percent for 2017 and 15.1 percent for 2018.

"Chinese macroeconomic forces are improving comprehensively, with infrastructure investment and the Belt and Road initiative stimulating demand, and supply-side reform and the reform of state-owned enterprises further boost the consolidation of industries," Lu Jie, head of research at Robeco China.

The forward price/earnings ratio of A-shares will be 15 times, which is close to the historical average, indicating that  stock prices are reasonable, according to the firm.

Foreign investors are also participating further in the Chinese market as the investment quotas of Qualified Foreign Institutional Investor and Renminbi QFII have been raised, while the Bond Connect scheme will accelerate market access, the firm pointed out.

Chinese companies listed overseas are also slated to rise, with the earnings per share expected to climb 22 percent for this year and 14 percent for 2018, Robeco said.

Miao Zimei, chief investment officer at Robeco China, said that investment sentiment for overseas shares is high.

"The global emerging market funds overweigh the MSCI China Index assets as the MSCI China index is one of the best performing indexes, and new capital from investors in the mainland continues to flow into the offshore markets," Miao said.

Robeco is optimistic about expected return on investments globally in the next five years.

But the firm cautions that equities generally are expected to return less than before in the next five years, with developed market stocks returning 5 percent a year, down from 6.5 percent, and emerging market stocks gaining 6.25 percent compared to 7.25 percent last year.