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Director’s Cut
More positive on China equities
With Southeast Asia having served as emerging Asia’s ‘safe haven’ region amid
the recent volatility, and North Asia seeing the bulk of the selling, Michael Kurtz
is looking for opportunities to fade ASEAN names to fund buying in North Asia.
Specifically, Michael has upgraded inexpensive and under-owned China to
Overweight from Neutral, while maintaining reduced Overweights in Korea and
Taiwan. He does not expect a V-shaped market recovery from here, but would
be a selective buyer of beta where genuine value is on offer as he believes the
balance of risk on a six-month view is to the upside. For investors looking for
defensive exposure in Asia, he highlights Telecoms, arguing that other defensive
sectors look expensive, particularly utilities and staples. >> Read Report
Supporting a more positive view on China is Graeme Train’s report that shows
construction activity in China is still very solid. With increased restrictions on
property purchases and tighter lending conditions, the sector looked to be one of
the most vulnerable this year. That said, the sector has performed well, with the
monthly activity data for real estate built by commercial developers showing
strong growth in sales, new starts and ongoing construction.
Graeme also highlights that the weakness in property transactions is largely in
some first and second tier cities, not the whole market. While residential has
been strong, non-residential also continues to outperform, correcting a trend of
underinvestment in commercial and office real estate that was seen between
2007 and 2009. With sales actually expanding (compared to a collapse in 2008),
and with sales rising above growth in completions, we therefore remain positive
on the sector, and continue to see a soft landing in China.
Highlights
Agriculture Bank of China and Bank of China post very strong profit
growth, but among the majors Victor Wang prefers ICBC.
Lee Bowers believes the structural Chinese growth dynamic is likely to
support BHP Billiton and commodity prices over coming years.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Director’s Cut
More positive on China equities
With Southeast Asia having served as emerging Asia’s ‘safe haven’ region amid
the recent volatility, and North Asia seeing the bulk of the selling, Michael Kurtz
is looking for opportunities to fade ASEAN names to fund buying in North Asia.
Specifically, Michael has upgraded inexpensive and under-owned China to
Overweight from Neutral, while maintaining reduced Overweights in Korea and
Taiwan. He does not expect a V-shaped market recovery from here, but would
be a selective buyer of beta where genuine value is on offer as he believes the
balance of risk on a six-month view is to the upside. For investors looking for
defensive exposure in Asia, he highlights Telecoms, arguing that other defensive
sectors look expensive, particularly utilities and staples. >> Read Report
Supporting a more positive view on China is Graeme Train’s report that shows
construction activity in China is still very solid. With increased restrictions on
property purchases and tighter lending conditions, the sector looked to be one of
the most vulnerable this year. That said, the sector has performed well, with the
monthly activity data for real estate built by commercial developers showing
strong growth in sales, new starts and ongoing construction.
Graeme also highlights that the weakness in property transactions is largely in
some first and second tier cities, not the whole market. While residential has
been strong, non-residential also continues to outperform, correcting a trend of
underinvestment in commercial and office real estate that was seen between
2007 and 2009. With sales actually expanding (compared to a collapse in 2008),
and with sales rising above growth in completions, we therefore remain positive
on the sector, and continue to see a soft landing in China.
Highlights
Agriculture Bank of China and Bank of China post very strong profit
growth, but among the majors Victor Wang prefers ICBC.
Lee Bowers believes the structural Chinese growth dynamic is likely to
support BHP Billiton and commodity prices over coming years.
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