Citibank: Chinese equities to witness strong rebound on positive trade talks with US

Citibank analysts are expecting Chinese equities to rebound significantly, if Trump & Xi set aside the majority of immediate trade issues for future negotiation and develop some areas of agreement by March 1^st.

Key Quotes

“This view extends to Chinese companies focused on their domestic market as China has spent a longer period than the US gripped by fears of a slowdown. China has taken steps to strengthen its economy.”

“If further tariffs go into effect on March 1st, the Chinese Stimulus provides some cushion to its impact on their economy & lengthens the time China can negotiate.”

“Given our highest probability view that US macro policy overall will need to shift toward sustaining expansion, the likely combination of low US rates & Chinese stimulus could extend the global equity recovery after an already generous rally. A preliminary trade deal would be positive for markets and global equities could be up 5% by end-19.”