"Property policies will be supportive for inventory de-stocking in lower-tier cities. The government is banking on housing demand from migrant workers," HSBC GAM senior macro & investment strategist Renee Chen said in a recent macro outlook report.
She expects that the government would remain supportive in carrying out policies for the majority of cities, in particular, the lower-tier cities, as the nationwide inventory is still high and the recovery of property construction and investment evidenced in January and February has not been confirmed.
Among other industries, high-tech companies, high-end consumer goods and services sectors are also expected to gain support from the government's effort o encourage innovation and entrepreneurship, Chen said.
However, there are possible downsides of the government’s pro-growth strategy and may have some impact on other industries, Chen said. It could “slow or delay crucial state-owned enterprise or structural reforms and come at the cost of a further rise in leverage and government debt levels.”
Notably, Chinese banks are under huge pressure amid risks of deteriorating non-performing loan ratio and exposure to the shadow banking system, she said.
Still, she maintained a stable outlook on onshore bonds, as supported by “tepid economic growth, benign inflation outlook and accommodative monetary policy.”