Swissquote Bank's head of research Peter Rosenstreich said that the company tends to take a more positive outlook for China than other investors in the medium to long term.
He expected GDP growth in China to be 6.9 percent this year now that "global trade is coming back significantly" and will be a stronger support to China.
In his report, Rosenstreich said that China's reflation will remain benign, with headline CPI expected to be at 2 percent as aggregated demand slows, and the likelihood for the People's Bank of China, or the Chinese central bank, to halt interest rate cuts this year.
As for the yuan, he believes it will continue to face depreciation pressure. But the pace of China's capital outflow will slow, so that the yuan will stay stronger relative to most other currencies in the world.
"China will be the biggest winner in a U.S.-China trade war" should it happen, predicted Rosenstreich. China will become a power center in Asia to contribute to its regional stability. The Trump administration can't isolate China by accusing it of currency manipulation, he said.
As for the U.S. economy, Rosenstreich said he expects two interest rate hikes this year, in June and September, and each time by 25 basis points.
As to equity markets in the world, Rosenstreich said he believes that emerging markets, especially Asia, should do relatively well this year and China is well-positioned for equity appreciation.
Rosenstreich said it would be wise to buy emerging market currencies with strong domestic outlooks and low correlation with the U.S., such as India, Thailand, Brazil and Russia. At home, it will short euro and long Swiss Franc as a hedge against the European political risk.
