Hang Seng index seen gaining 2.1 percent over next 12 months, ZEW says
Investor optimism over China rose to a five-month high as internal demand increased and the outlook for the crucial construction sector brightened compared with previous months, according to the ZEW China Economic Panel (CEP).
The 12-month outlook for China’s economy rose 16.7 points in June to 21.4 points, the highest reading since January, ZEW says in its monthly economic survey on China. The country’s energy sector led the gains, with its outlook rising 30.3 points to 43.8, followed by the electronics sector, which gained 30.3 to 43.8 points amid rising internal demand.
‘The perceptible increase in the CEP Indicator is carried by expectations of rising sales volumes of energy companies and by an increasingly domestic-oriented electronics industry,’ ZEW writes on its website. ‘Business outlooks for the construction sector, which have been assessed critically by the experts recently, also show improvement over the previous month.’
The assessment of the current economic situation in China rose sharply in June, gaining 15.5 points. It entered positive territory at 13.9 points and outstripped Europe’s advance of 3.5 points and the increase in the US of 2.7 points.
The outlook for the Hang Seng index also brightened, with the survey participants expecting it to reach a level of 23,688 points over the next 12 months, compared with the 23,279 predicted in the survey in May. The level predicted for 12 months from now would indicate a gain of 2.1 percent from the June 30 close.
The construction sector outlook increased 16 points in June, entering positive territory at 8.3 points. Even so, the outlook for housing prices in most major Chinese cities remained in the negative and even worsened.
‘The participants keep expecting housing prices in many important Chinese cities to decrease,’ ZEW says. ‘This could be due to a material number of large construction projects being close to completion within the next twelve months.’
