19-12-2018

The Fed will be announcing its latest rate decision on Thursday Hong Kong time, coupled with the ongoing Central Economic Work Conference (CEWC) which takes place from Wednesday till Friday, investment opportunities may be presented for investors. For the Fed’s rate announcement, while majority of the investors are expecting the Fed to raise interest rates by a quarter of a percent, they will be paying close attention to Fed’s speech coming out of the meeting. If the speech signals that the Fed will pencil in fewer rate hikes or even the end of rate hike period, catalysts will be provided to local property companies which are interest sensitive. Also, a slower pace of rate hike helps offsetting the pressure from the increasing discount rates which will therefore benefit utility stocks with consistent dividend payout. As for the CEWC, it is expected that more measures will be carried out by the government in order to stimulate growth. According to data from the National Bureau of Statistics, the growth of Fixed asset investment (FAI) has been slowing down this year with a 5.9% increase year over year from January to November. However, FAI starts picking up momentum significantly in the second half of the year. More stimulus measures are expected to be carried out by the government amid the increasing downward pressure on China’s economic growth which will lead to a positive impact on infrastructure-related stocks and provide investors with decent investment opportunities.

Reference:
Bloomberg
National Bureau of Statistics

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