Top equity strategist tips SCI to fall in 2011, others more bullish

The strategist who correctly predicted last year’s drop in China stocks said the slump may run to a second year as interest rates are hiked to control inflation, leading to liquidity problems, Bloomberg reported. But the pessimism of Guotai Junan Securities’ Zhang Kun is not shared by his rival brokers. CITIC Securities (600030.SH) and Shenyin & Wanguo Securities both forecast gains of at least 25% in the Shanghai Composite Index. The index declined 14% in 2010 to 2,808.08 points, making it the worst-performing benchmark index in the world’s 10 largest markets. China International Capital Corp, the only other major Chinese brokerage to predict last year’s drop, expects the SCI to rebound this year as economic growth remains robust and inflation eases. Foreign investment banks are equally bullish, with J.P. Morgan (JPM.NYSE) forecasting a 20% gain and Citigroup (C.NYSE, 8710.TYO) saying the SCI could reach 4,000.