(Yicai Global) March 7 -- UBS has lifted its prediction for China’s gross domestic product growth in 2023 to 5.4 percent from the previous 4.9 percent as the country’s economy has restarted faster than expected after Covid-19, and the recovery may extend into 2024, the Swiss banking giant said.

The feared “second-wave” of Covid has not materialized and there is little sign of supply disruptions, UBS said in a report released yesterday. Property sales in 30 cities have bounced back to close to 2019 levels, suggesting that the real estate market may have bottomed earlier than originally expected, it added.

Large accumulated bank deposits will gradually be released this year and next as economic recovery lifts consumer confidence, UBS said. As a result, the Zurich-based lender is also upgrading its forecast for 2024 to 5.2 percent from 4.8 percent, it added.

The Chinese government set the nation’s economic growth goal for 2023 at about 5 percent at the ongoing annual meetings of the country’s top political and legislative bodies and has said it will prioritize economic recovery and boosting consumption. UBS said it therefore expects the government to introduce more supportive policies.

Chinese mainland stocks could realize an appreciation in value of 15 percent this year and outperform the Asian stock market, Meng Lei, strategist at UBS’ securities unit in China, UBS Securities, said today. UBS is bullish on stocks in consumption as well as the digital economy, he added.

Chinese stocks still only account for a small proportion of global investors’ asset allocations, so the mainland market should see long-term inflow of overseas funds, Meng said.

Funds flowing in through the Hong Kong-mainland stock connect mechanisms, which allow mainland and Hong Kong investors to trade stocks in each other’s markets through their home exchange, will reach CNY300 billion (USD43.3 billion) this year, he said.

Editor: Kim Taylor