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Most Recent Stories

3 REASONS TO BUY CHINA ON DIPS

JP Morgan says investors should buy Chinese equities on any dips.  They believe the economy has bottomed and that the environment will remain conducive to economic growth:

(1) China’s real GDP growth, on a sequential basis, may have bottomed out at 7.2% QoQ in 2Q10. Yet we believe China’s final demand growth will not bottom out until late FY10, because the modest sequential rebound in GDP in 3Q should be driven by a slowdown in de-stocking and the widening of the trade surplus on sharply falling imports, rather than by a decent recovery in final demand;

(2) improving liquidity conditions – (a) China’s M2 growth (which tends to lead H-shares performance), on sequential terms, is expected to bottom out, with trend growth reaching a trough of 11.8% 3m/3m, saar in September before rising to 16.8% in December; (b) we estimate new loans made by Chinese banks in 2H10 will reach around Rmb3 trillion, up 37% YoY;

(3) we believe the worst of the policy tightening environment may be behind us.”

Source: JP Morgan

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