Survey: Fund managers still bullish on China

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.