CNCBI economic outlook: Global economy to see strongest post-recession recovery in 80 years in spite of uneven growth across geographies

China CITIC Bank International latest economic outlook

Global economy to see strongest post-recession recovery in 80 years

in spite of uneven growth across geographies

(Hong Kong: 5 Aug 2021) China CITIC Bank International Limited (the "Bank" or "CNCBI") today releases its latest market outlook. As a result of the vaccination progress and a favourable base for comparison, the global economy is expected to rebound strongly.

• Global GDP growth is estimated to reach 5.6% in 2021, the strongest post-recession recovery in 80 years which offsets the 2020 contraction of 3.5%
• Mainland China's growth is expected to stay ahead of other economies with full-year GDP grow of 8.5%
• Hong Kong's GDP growth may reach 6.0%

Mainland China to continue recovery lead despite uneven domestic figures

Mainland China's first-quarter GPD rose 18.3%. The record expansion was attributable primarily to a favourable base for comparison. As this influence subsided in the second quarter, the country's second-quarter GDP growth dropped 10.4 percentage points on the quarter to 7.9% y-o-y although underlying growth was stronger with average annual growth during a two-year period at 5.5% in the second quarter, approaching pre-pandemic levels and 0.5 percentage points stronger than the previous quarter. In view of this, the country's GDP growth will keep ahead of other major economies' with 8.5% for the year 2021.

Mainland China's international trade has been particularly strong and is likely to remain buoyant on the back of the country's robust supply chain. In RMB terms, merchandise exports rose 28.1% y-o-y in the first half of the year while imports gained 25.9%. In June, total merchandise trade posted growth for 13 consecutive months with a 22.0% increase y-o-y. However, domestic recovery remains uneven. Industrial production has recovered fully with a 6.5% gain in June in terms of average annual growth during a two-year period, whereas private consumption has remained relatively weak logging a nominal retail sales increase of 4.9% in June in terms of two-year average annual growth. After adjusted for inflation, real growth may only be about 3.5%.

Mr Tristan Zhuo, Chief Economist, CNCBI, notes, "In a bid to ensure reasonably adequate liquidity for sustaining and broadening economic recovery, the People's Bank of China lowered the reserve requirement ratio (RRR) by 0.5 percentage point in July, which is translated into an 8.9% weighted

1

average RRR. This across-the-board, untargeted RRR cut was largely unexpected and it does not signal a directional shift in the stance of the country's monetary policy. In line with the mainland government's repeat emphasis on avoiding excess liquidity, the benchmark loan prime rate (LPR) has remained unchanged since April 2020 and is unlikely to be adjusted any time soon.."

Hong Kong to reign supreme in resuming pre-pandemic normalcy

Hong Kong's climbing COVID-19 vaccination rates in addition to relaxation of preventive measures have positive impacts on the city's consumer confidence stimulation and economic activities resumption. According to recent research results published by weekly newspaper The Economist 1, Hong Kong came out tops among 50 of the world's largest economies in terms of returning to pre-pandemic normalcy. The city posted GDP growth of 8.0% in the first quarter of the year, which ended the contraction that lasted six consecutive quarters. The GDP stood at 7.5% in the second quarter, and is on track to grow 6.0% in 2021, higher than the 5.5% upper bound of the HKSAR government's initial estimate.

The labour market has also been improving. The seasonally adjusted unemployment rate declined rapidly after peaking at 7.2% in February. Mr Zhuo adds, "At the current rate, unemployment may drop below 5.0% by the end of the year. As vaccination rates continue to rise, the eventual reopening of the mainland border will provide the Hong Kong economy and in particular retail and tourism an extra boost. In view of the robust economic rebound, fast-improving unemployment, and stronger consumer market, Hong Kong's economic outlook is fairly positive."

Please visithttps://www.cncbinternational.com/_document/personal/investments/en/market_express.pdffor more market insights. You may also access the mobile edition of Market Express on the Bank's inMotion (Open the inMotion app and tap "Wealth Management" at the bottom right corner).

1 "Covid-19 data - The global normalcy index." The Economist Newspaper Limited, 21 July 2021, https://www.economist.com/graphic-detail/tracking-the-return-to-normalcy-after-covid-19.

2

Photo

Mr Tristan Zhuo, Chief Economist, CNCBI, says that the global GDP is estimated to rise by 5.6% in 2021, the strongest recovery in 80 years, while Mainland China and Hong Kong's GDP growth may reach 8.5% and 6.0% respectively.

3

Risk Disclosure Statement and Disclaimers:

This document is issued by China CITIC Bank International Limited ("the Bank") and used for reference purposes only. The information or opinion herein is not to be construed as professional investment advice or any offer of, or invitation by or on behalf of the Bank to any person to purchase, sell, acquire, or invest in any investment products. The information or opinion presented has been developed internally and/or taken from sources believed to be reliable, but the Bank makes no warranties or representation as to the accuracy, correctness, reliabilities or otherwise with respect to such information or opinion, and assume no responsibility for any omissions or errors in the content of this document. For information which is provided by the Information Provider and fund houses, it is being re-transmitted by the Bank in the ordinary course of business to you for general information and reference purposes only. The Bank did not modify or otherwise exercise control over its contents, do not take responsibility for it nor do they endorse the accuracy of such information. Investors should not make any investment decision purely based on this document. Nothing contained in this document should be construed as guidance to the suitability of the markets mentioned. Before making any investment decision, investors should carefully consider the risk factors relating to an investment product in light of their own financial circumstances, investment objectives and experiences and other personal circumstances, and should seek appropriate professional advice if necessary.

The Bank accepts no liability for any direct, special, indirect, consequential, incidental damages or other loss or damages of any kind arising from any use of or reliance on the information or opinion herein. Investment involves risks. Investment value and return may go down as well as up. Past performance of each investment product is not indicative of its future performance. Losses may be incurred as well as profits made as a result of investing in investment product. Investment in emerging markets involves above-average investment risks, such as possible fluctuations in foreign exchange rates, political and economic uncertainties. Some funds are entitled to use financial derivative instruments to meet its investment objective and may therefore lead to higher volatility to its net asset value. Investors investing in these funds may result in loss of some or the whole amount of the capital invested. Investors should read the offering documents of the relevant investment product (including the risk factors stated therein (in particular those associated with investments in emerging markets for funds investing in emerging markets)) in details before making any investment decision.

The Bank is an authorised institution under the Banking Ordinance and is regulated by the Hong Kong Monetary Authority.

This document is issued by the Bank and its contents have not been reviewed by the SFC or any regulatory authority in Hong Kong.

4

No part of this document may be reproduced or transmitted in any form or by any means without the prior written permission of the Bank.

China CITIC Bank International Limited

China CITIC Bank International Limited ("CNCBI") is 75%-owned by CITIC International Financial Holdings Limited ("CIFH"), which in turn is a wholly-owned subsidiary of China CITIC Bank Corporation Limited ("CNCB").

By providing value-creating financial solutions to define and exceed both wealth management and international business objectives of Greater China and overseas customers, CNCBI aspires to be "the best integrated financial services provider", with the highest international standards and capabilities.

CNCBI's footprint in Greater China includes 27 branches and two business banking centres in Hong Kong, as well as branches and presence in Beijing, Shanghai, Shenzhen and Macau. CNCBI also has overseas branches in New York, Los Angeles and Singapore. More information about CNCBI can be found on its website at www.cncbinternational.com.

- End -

5