Singapore Stock Market News

China: still a waiting game

StockFanatic
Publish date: Tue, 02 Jul 2013, 10:32 AM
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Asia Pacific Equity Strategy - China

Tactically, the Chinese equity market looks appealing. However, economic fundamentals continue to weaken and the trajectory of improvement remains uncertain even if a bottom is near. Economic growth was slowing even before liquidity conditions began to tighten.

Higher leverage and lower capital efficiency amplify existing growth risks even if concerns over a financial sector crisis are overblown. Market composition (overweight capital heavy and inefficient SoEs) is a headwind for strong profit rebound and a structural growth downgrade is not yet reflected in lower profit share expectations.
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