Asia-focused fund managers still favor Greater China equities due to expectations that the Chinese economy will fare relatively well despite a global recession, according to a Merrill Lynch survey. Half the fund managers surveyed intend to "overweight" on Chinese stocks even though 80% expect the economy to slow, the South China Morning Post reported. Analysts said that investors see China as a safe haven thanks to Beijing’s ability to roll out more economic stimulus measures. The Shanghai Composite Index (SCI) is down by more than 60% so far this year but Pu Yonghao, chief regional economist at UBS, said the government’s desire to stabilize the market means the chances of a further decline are slim. Pu noted that stocks are trading at 12 times their forecast earnings for 2008, compared to ratios of 40 times in recent years.
You must log in to post a comment.