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China Stock Market Outlook 2018

As the U.S. stock market continues to rally relentlessly it is most likely on its path to set a major top and correct sharply anytime soon. If and when that happens we believe at InvestingHaven that capital will rotate out of U.S. stock markets into emerging stock markets (EEM). So the question is, if that is true of course, which emerging market to choose? InvestingHaven’s research team strongly believes that China must be on your radar. China’s stock market outlook for 2018 is bullish to very bullish, and the large caps FXI (FXI) are a great way to play this, find out in this article why we believe so.

China’s foundations: amazing +6 pct economic growth in 2018 and beyond

It is amazing that there are countries in 2018 that are able to have economic growth of more than 6 percent. That is hardly possible in the West, only emerging markets can set growth figures of more than 6 percent.

  • China is expected to grow 6.3 pct according to the World Bank and 6.4 pct according to the OECD.
  • China’s growth forecast for 2018 is 6.8 percent.
  • While China’s growth rates for 2019 to 2022 have similarly been revised upward by 0.2 percentage point on average, the IMF urged the Chinese authorities to intensify their recent efforts to rein in credit expansion and strengthen financial resilience.
  • Reuters says: World Bank raises 2017, 2018 East Asia growth forecasts, sees geopolitical risks
  • China’s economy seen growing 6.8 percent in 2017 and 6.4 percent in 2018: Reuters poll.

What stands out is the economic growth which, more importantly, comes out higher than expected.

The caveat is the geopolitical risk, which, in all honesty, is not something exclusive to China or the East. Geopolitical risk is almost a reality to all countries; and if it’s not geopolitical it certainly is terrorist.

China stock market outlook for 2018

This continued strong economic growth will certainly propel stock markets. There is no one-to-one correlation but a lack of economic growth is certainly not helping stock markets; we look at the economic outlook as a mandatory condition or healthy ground on which a positive stock market growth can take place.

InvestingHaven recently tipped China as one of the leading emerging stock markets. With the current setup we believe China will be one of the outperformers in 2018 and beyond.

Our positive outlook for China’s stock market in 2018 is largely based on the chart setup. The chart below makes the point: China is consolidating for a long time now. The golden investment rule: the longer the consolidation the stronger the breakout and upward potential.

China’s SSEC index (the Shanghai Stock Exchange Composite Index) (SSEC) shows that very important level of 3300 to 3400 points. It is former resistance (tops of November 2016 and April 2017), and could become future support.

What we are saying is that 3300 points should hold. If that materializes we are convinced China’s stock market outlook will be strongly bullish in 2018.

In case 3300 points does not hold then we see a second support level at 3100. If that holds the outlook for China’ stock market will be bullish in 2018.

Moreover, as InvestingHaven’s research team said recently, in this article emerging market stocks in 2018 – focus on China we showed that China could be outperforming India in the near future.

Last but not least, given the strong correlation between China and copper, we see another indicator which supports China’s positive outlook for 2018, both its stock market and the price of copper which continues to be bullish.

InvestingHaven’s research team analyzed China in-depth, and found a number of sectors that are set for great gains. Moreover, 7 specific stocks are expected to strongly outperform the market. Read this exclusive report 7 high quality China stock tips for long term portfolios >>

china stock market outlook 2018

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