C16211 Connctss Pocast Nam Strap

On Friday, December 21, Yang Zhao, Wendy Liu and Richard Huang discussed their 2017 outlook for the Chinese economy, equity markets and the gaming sector with the media in Hong Kong. Hear from them in this podcast, which is a compilation of their three segments during the briefing. See below for the individual time stamps.


Yang Zhao

00:00 – 11:13

Wendy Liu 

11:14 – 20:23

Richard Huang 

20:25 – 29:28


Take a look at some of the key points below:

We believe that the growth will still face downward pressures coming from cooling real estate sector and external uncertainties. The government may launch a fiscal/quasi-fiscal stimulus to offset headwinds in the economy.  Monetary policy may be neutral with one RRR cut, no rate cut and further RMB depreciation. Risks are biased towards downside to our forecast of economic growth.


For equities, one commonality among MSCI China, HSI, HSCEI, CSI300, is that all four trade at the low end of global equity valuation spectrum, particularly on PB and dividend yield term. Sometimes, valuation is the best catalyst by itself. We forecast low double digit total return in local currency terms in 2017. We anticipate a few more China specific risks in 1H than 2H. We’d watch out for policy uncertainties brought upon by the Trump presidency, China’s renewed cautionary measure to rein in asset bubbles, likely slowing physical property sales, plus concerns over currency weakness/capital outflows. But undemanding valuation, marked free cash flow improvement in listed non-financials, thanks to better operating efficiency and rationalizing capex, plus a potential shift toward growth stabilization ahead of the 19th Party Congress in the fall, make us more upbeat on the second half. 

Looking at the gaming sector specifically, there have been consecutive gaming revenue declines in Macau. In the second half, we’ve finally seen some recovery. We expect that this will extend into 2017. For the VIP segment, although there have been some signs of recovery, our view is that the property market will soften in 2017, and will have a negative impact on the demand for VIP gaming experiences in Macau. The mass-gaming segment of gaming has been delivering very healthy growth in 2016. We expect the pace of growth to double in 2017. The driver behind this growth is the construction of new integrated resorts – the desire for Chinese consumers to go abroad.

For more research on China from our three analysts, visit our Global Research Portal.

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