The Shanghai Composite Index was up +14% in 2017 and it was once again firmly on investors’ radars for all the right reasons. China, the world’s second-largest economy, produced GDP growth of 6.9% for 2017, which is an impressive number. This coupled with low consumer-price inflation at 1.7% and new-loan growth of over 13%. During the quarter, the 19th  Party Congress took place and the takeaway for investors is policy to create greater political stability and more consistency in state policies. Furthermore, the future growth drivers for the Chinese economy will no longer be investments like infrastructure and real estate in the past decades such as technological innovations, as well as manufacturing and consumption upgrades by a more affluent population.

Meanwhile, the Central Bank has granted a so-called “temporary loan facility” to help banks with extra-large cash demands during February’s Chinese New Year, where they can use up to 2% of any required reserve funds for a maximum of 30 days. China is and will remain a key global growth economy. The estimated price/earnings ratio for the Shanghai Composite Index is 13.4 with earnings growth of over 7%, low inflation and savings of $3.5 tn.

Source: Bloomberg, Open Door, APS Asset Management