UBS Securities – Automobile: We forecast electric cars will post an annual compound growth of 20% over the next 2 years. During this period, the development of the electric car sector will see a shift in focus from quantity to quality.
SWS – Interest Rates: There is more evidence indicating the current high interest rate level is not simply a cyclical problem, but is instead a structural problem. It is more likely that China will use a gradual approach, and establish a buffer to prevent and resolve current financial risks, which includes:
1. fully monitor the shadow banking system
2. establish a deposit insurance system, enhance exit mechanism for financial institutions
3. set up local government debt control system
4. establishment of a market-driven financing system for local governments.
These are big changes that cannot be accomplished in just one step. At the early stage of this transformation, policies that China takes to address risks will raise the market’s risk awareness and ease the mismatch between risks and returns
SWS – State-owned assets reform: SWS thinks the reforms this time are genuine as it is only by deepening reforms in state-owned assets that monopolies could be broken up, creating room for the development of the private economy. We do not see any development of the private economy or a fair marketplace without SOE reforms.
Also, governments are eager for new revenue sources, and revitalizing state-owned assets is a realistic choice.
*KraneShares is not affiliated with any of the brokers listed, and neither KraneShares nor SEI Investments Distribution Co. sponsor the opinions or information offered by these brokers, nor do they assume liability for any loss that may result from relying on these opinions or information. The material is not intended as an offer or solicitation for purchase or sale of any security, nor is it individual or personalized investment advice.
For more information about investing into China, KraneShares or KraneShares’ ETFs please contact Brendan Ahern at [email protected] or +1.646.218.9852