。 1MULTI-ASSET ● CHINAJanuary 2019As we head into the Year of the Pig, we offer clients our multi- asset views on China by providing two-page summaries of 35different reports. They reflect the thoughts of our macro teams onthe economy, FX, rates, credit, and ESG, and include thematicreports by equity strategists and analysts. We also highlight thegrowing body of work produced by our joint venture, HSBCQianhai Securities.A very warm welcome to the Year of the PigLast year proved to be a challenging time for the Chinese economy. The escalation of the tradewar with the US hurt sentiment and created uncertainty about the outlook for the businessenvironment and the currency. Financial deleveraging has by and large continued despitemarginal relaxation in regulations. As a result, broad credit growth has continued to ease,making life particularly difficult for the private sector, the heartbeat of the economy.Both the domestic and external challenges are likely to persist in 2019. However, we believemore policies to support domestic demand, especially tax cuts, will be introduced in order tocushion the impact on economic growth. We also think that, after a strong year, further gains inChina bonds are likely in 2019 as Beijing continues to provide policy accommodation.We believe that, despite a difficult year, the outlook for A- and H-shares is bright given the rightconditions – our house view that US interest rates will peak in September 2019 is one of thoseconditions. Our equity analysts share their ideas on a wide range of sectors, while ourstrategists look at the markets, demographics, supply chains and SOE reform.Meanwhile, our coverage of A-shares continues to expand as a result of our joint venture,HSBC Qianhai Securities, which was launched in December 2017. The initiative reflects thegrowing importance of China’s domestic equity markets, which are already Asia’s largest interms of market capitalisation and trading volumes, and are expected to see a significantincrease in foreign participation now that MSCI has added more than 200 A-shares to itsemerging market index.Our growing team of equity analysts at HSBC Qianhai Securities has produced a series of in- depth reports covering everything from baiju, beer, fintech and cybersecurity, to healthcare,media, the Internet, semiconductors and smartphones. Our coverage will become even broaderthis year.A very happy Year of the Pig from all of us at HSBC Global Research and HSBC QianhaiSecurities.IntroductionDilip ShahaniHead of Global Research, AsiaPacificThe Hongkong and ShanghaiBanking Corporation Limiteddilipshahani@hsbc.hk+852 2822 4520William Bratton*Head of Equity Research, AsiaPacificThe Hongkong and ShanghaiBanking Corporation Limitedwilliam.bratton@hsbc.hk+852 2822 1622Steven Sun*, CFA(S1700517110003)Head of Research, HSBC QianhaiSecurities LimitedHSBC Qianhai Securities Limitedstevensun@hsbcqh+86 755 8898 3158* Employed by a non-US affiliate of HSBCSecurities (USA) Inc, and is not registered/qualified pursuant to FINRA regulationsCredit growth has continuedto easeOur coverage of A-sharescontinues to expandMULTI-ASSET ● CHINAJanuary 20192Introduction 1HSBC Global Research and HSBCQianhai Securities: Major Chinareports 4Economics: 2019 outlook – five keymacro trends 8Economics: The Greater Bay Area –many cities, one goal 10FX: Our RMB forecast 12Rates: The bull run continues 14Credit: Local government debt –knowns and unknowns 16ESG: What MSCI A-share inclusionmeans for ESG 18Equity Strategy: 2019 H-share outlook– why we remain believers 20Equity Strategy: SOE reform – whenKarl Marx meets Adam Smith III 22Equity Strategy: The rise of China’sempty nesters 24Equity Strategy: Retooling Asia’ssupply chains 26Auto components: Going global thekey to success 28Autos: Our 2019 dashcam 30Brokers: Stock-pledged lending – along overhang 32Financials survey: Anatomy of aconsumer 34Infrastructure: On the move again 36Internet advertising: Slower growth,new players 38Real Estate: A city-by-city debt healthcheck 40Telecoms: 5G in focus 42Utilities: The Belt and Road – how toplug the power gap 44HSBC Qianhai Securities Equity Strategy: Our 2019 outlook forA-shares 46Beer: Cheers… here’s to better profitsfor brewers 48Custom furniture: New floor plans 50E&C: Building up to a sector re-rating52Good spirits: A toast to baijiu 54Healthcare: Our prognosis for thesector to 2030 56Contents 3MULTI-ASSET ● CHINAJanuary 2019Healthcare: The benefits of quickerdrug approvals 58IT Software: The rise of China’sdigital doctors 60Machinery: Plenty to build on 62Media: A Hollywood moment forChina’s film-makers 64Media & Internet: Big data, newvalues, future trends 66Media & Internet: The keys to China’sdigital kingdom 68Semiconductors: China’s great chipchallenge 70Smartphones: How the supply chaincan beat the sales slowdown 72Software: A cybersecurity revolutionin the cloud era 74Software: Fintech investment tosurge in a new policy era 76Disclosure appendix 78Disclaimer 82。。。。。。