Emerging "new economy" driven by consumption and services to rally A-share market in H2

Hua Lingxi
The economy's shift from high speed growth relying on infrastructure spending to a high quality model will draw investments in consumption upgrade, technology and innovation.
Hua Lingxi

An emerging "new economy" powered by consumption and services is set to lift China's A-share market in the second half of the year from recent turmoil, said Robeco, an investment management company.

Uncertainty over a possible full-blown Sino-US trade war and a tit-for-tat dispute between the world's two biggest economies have lingered over China's share market.

Consumption and services are likely to play a bigger role in China's emerging "new economy" which will help the A-share market recover in the second six months of the year, Robeco said.

China has been implementing more effective policies, promoting industry consolidation via supply-side reform, restructuring state-owned enterprises, internationalizing the yuan further and contributing to the recovery of the global economy, the investment management company said. 

Shifting the economy from high speed growth dependent on infrastructure spending to a high quality model will draw investment opportunities related to the new economy such as consumption upgrade, technology and innovation as well as structural reform, Robeco predicted.

China's new economy is expected to account for over 55 percent in the MSCI China's market cap, according to market observers.

Robeco is also "cautiously optimistic for the A-share market in the second half of 2018 as the valuation is at a lower level and earnings revision is expected to remain resilient," said Lu Jie, head of research China at Robeco Asia Pacific Equities.

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