China’s “Two Sessions," the country’s annual parliamentary meetings, have kicked off Monday, and are expected to continue until mid-March.
Among other things, the 2024 Government Work Report detailing economic goals and main policy focuses, along with the fiscal budget report, will be unveiled.
In their preview of this closely watched event, Goldman Sachs strategists said:
“We continue to expect an ambitious growth target (around 5% of real GDP growth) and more supportive fiscal policy stance (3% on-budget fiscal deficit ratio with RMB 1 trillion central government special bond and RMB 4 trillion local government special bond) this year,” analysts said in a note.
“Key topics to monitor during this year’s “Two Sessions” include discussions about the government’s “new model” for the property sector, local government financing and fiscal reforms, as well as other demand-side stimulus such as support to consumption.”
Similarly, UBS strategists anticipate that the "Two Sessions" will likely indicate continued policy support to maintain GDP growth, aiming for a target of "about 5%." They maintain their recommendation for a “barbell strategy with a tilt to defensive high-yielding dividend stocks.”
Yet, if an unexpectedly favorable policy development occurs, investors are advised to shift some of their investments into sectors sensitive to economic recovery, such as internet and consumer industries, UBS said.