Gold and Chinese stocks still have room to rise, CICC says

Investors should follow overweight positions successful golden and Chinese stocks, arsenic the outlook for these assets remains affirmative contempt short-term challenges, according to concern slope China International Capital Corporation (CICC).

While concerns astir stretched valuations for golden and Chinese stocks emerged pursuing caller rallies, strategists astatine CICC's probe portion said that some assets offered maturation imaginable and diversification value.

Gold's terms has risen much than 10 per cent this twelvemonth to astir US$3,000, pursuing a 26 per cent surge successful 2024 - the biggest summation successful 14 years. Driving the summation were the asset's semipermanent hedge quality against ostentation amid US President Donald Trump's inflation-prone policies and menace of tariffs, said Li Zhao, main plus allocation strategist astatine CICC Research.

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"Gold tin inactive support a semipermanent upwards trajectory," Li said. "There whitethorn beryllium two-way fluctuations successful the abbreviated term, but the mid to semipermanent bull marketplace remains unchanged."

He added that golden prices could proceed to emergence successful the adjacent decade.

Global cardinal banks' request for golden had grown, and Asian cardinal banks successful peculiar inactive had sizeable country to summation their positions compared with their US and European counterparts, Li said.

Gold comprises lone single-digit oregon debased double-digit percentages of the overseas speech reserves of the cardinal banks successful Asia-Pacific, specified arsenic Japan and India, Li said. Meanwhile, the tally successful developed markets successful Europe and the US could beryllium much than 70 per cent, helium added.

"Given the changing planetary scenery and inflationary pressures, we expect cardinal banks to proceed purchasing golden for respective much years," Li said.

An bureau of China International Capital Corporation is pictured successful Beijing connected October 28, 2020. Photo: VCG via Getty Images alt=An bureau of China International Capital Corporation is pictured successful Beijing connected October 28, 2020. Photo: VCG via Getty Images>

Gold besides represented debased correlation with astir assets and provided an annualised instrumentality of astir 8 per cent implicit the past 20 years - higher than bonds and commodities, according to Li. "Gold is an plus with semipermanent strategical allocation value," helium said.

As for Chinese stocks, the nation's biggest concern slope said their charismatic valuations, diversification worth and ongoing innovation supported a steadfast outlook.