Goldman Sachs has come out on Friday with a very bullish position on China's economy. Deng Tishun their China guru expects the economy to stabilise in the second half of 2009 and to take the country's stock markets up with it.He suggests that
the Shanghai-Shenzhen 300 Index which tracks China's 300 biggest listed companies, should rise at least 11 percent to 1,980 points next year. And he reckons Hong Kong's China Enterprise Index of top locally listed mainland companies may jump 53.4 percent to 8,900 points. He believes the stock market will benefit from attractive share valuations, improved liquidity and government stimulus plans.
In the first half of 2009 he goes for consumer-related companies, internet firms and telecommunication stocks and in the second half goes for banking, insurance, real estate, raw materials and transportation stocks .
I think that the criticism that the Chinese market was just too speculative has been tempered by the fact that Wall St. turned out to be a speculative driven greed machine and that the 60% fall in the Chinese market returns it to attractive earnings/price ratios. Deng Tishun is on the money!