Quantitative easing could swell to US$6 trillion

Business | 29 Jun 2020 4:35 pm

Quantitative easing by global central banks could reach US$6 trillion (HK$46.8 trillion) in the next 12 months, Citibank said.

It predicted that the global economy will contract by 3.5 percent this year, and grow by 5.5 percent next year.

The bank believes that China's industrial value-added data, fixed asset investment, retail sales, and other data have improved last month.

The Chinese economy is expected to grow by 6.2 percent in the first half of the year.

The rebound in the global stock markets after March seems to digest investors' expectations of a decline in corporate profits this year, said Wong Pak-ling, head of investment strategy & portfolio advisory, Citibank Hong Kong.

Citibank expects a rebound in corporate profits next year and is optimistic about the performance of crisis defensive stocks, including new economy shares, internet, and health care, according to Wong.

He said the Hang Seng Index could rise in the next 12 months, with a target of 28,226 points.

The bank also believes that the current valuation of the index is not expensive, and the expected price-earnings ratio is close to the level of about 11.5 times in the past 10 years.

 

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