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<Research>Daiwa: Investors Expect 'Consolidation Period' for CN Stocks Next 6 Mths; Low Expectations for Real Estate Stimulus
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Daiwa released a report on Hong Kong stocks, after it had conducted market promotion activities in Kuala Lumpur, Malaysia, and Singapore from last Tuesday (8th) to last Thursday (10th). During this period, U.S. President Donald Trump sent tariff letters to a group of trade partners. Akin to the stock market's muted response, most investors contacted by the broker seemed immune from the news headlines about tariffs, which tied to the expected “TACO” (Trump Always Chickens Out) and the extension of the trade negotiation deadline to August 1. Regarding China, investors believed that with its dominant position in rare earth production, China is well-positioned in trade negotiations with the U.S. The upcoming EU-China summit and a potential China-U.S. summit in 2H25 may entail a more optimistic geopolitical outlook, opined Daiwa. In the real estate sector, although recent policies expanding urban renewal projects supported market sentiment, Daiwa held relatively low expectations for real estate stimulus measures for the remainder of the year given tight local fiscal conditions. Most purchase restrictions in high-tier cities were removed, and the People's Bank of China lowered existing mortgage rate twice in the past 18 months. In the context of a favorable economic recovery in 2H25 and controllable tariff impacts, the broker considered policymakers will focus on implementing prevailing stimulus policies rather than introducing aggressive “incremental” stimulus measures. In lack of strong catalysts to push the index higher, investors expected the next 6 months to be a “consolidation period” for the Chinese stock market, with some expressing cautious market views, Daiwa noted. However, most investors approached by the broker indicated that downside risks are protected given ample market liquidity and strong policy support, and they currently maintain a neutral or slightly overweight position on the Chinese stock market. AASTOCKS Financial News Website: www.aastocks.com |
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