- Leading Indicator? — "The Chinese equity market has shown signs of ‘leading’ global equity markets at turning points over the past three years (the late-2007 peak, the late-2008 trough and the recent peak in markets at end-2009/start-2010); as a result, the 13% rally in the Shanghai Composite since early-July has been a major support for improved overall global sentiment over the past month."
- Biggest GEM — "Not surprisingly, China is now the biggest emerging market in the world, accounting for 18.6% of MSCI GEMs currently, up from 6.5% in mid-2000."
- Structural Change — "The big rise in China’s weight in global markets over the past decade is unrelated to market performance and is explained mainly by definitional changes to the shares included in the major indices (the Red Chips entered MSCI GEMs in June 2000) and to a huge rise in new listings over recent years."
- Why? — "China’ s leading indicator role may be explained by: i) the sheer size of its economy; ii) China’s role as, by far, the biggest consumer of commodities in the world (around 40% for some and close to 70% for iron ore); and iii) the recent tendency of the large Chinese equity market to move to extremes."
- Normalization — "The slowdown in the Chinese economy should continue, cutting year-on-year GDP growth to a trough of around 8% in 2011 Q1 – still, not a ‘hard landing’. Given that and inflation at around 3%, our China macro team expects policy to move to Neutral in the second half of 2010 with no rate hikes at all."
- China Strategy — "Our Chinese strategist, Minggao Shen, has turned more positive and expects the Shanghai Composite to rally by a further 5-15% to 2,800-3,100 by end-2010, based on: i) the economic slowdown being largely priced in; ii) policy headwinds are easing; iii) the massive liquidity drain in H1 2010 from the flood of IPOs etc. has likely ended; and iv) margin squeeze may have peaked."
- Asia Strategy — "Our Asian strategist, Markus Rosgen, has cut the size of his Underweight in China, on more attractive valuations and a slightly more bullish view on regional real estate; he looks to add to the market over the summer."
- GEMs Strategy — "We are currently Neutral in China in our GEMs portfolio. Given the analysis in this report, the recent strong rally in Chinese equities is important for global equities as a whole. However, with emerging markets looking somewhat overbought short-term, we also look to add to China mainly on weakness."
- Bullish — "Based on ‘no double-dip’ scenario, solid growth in emerging markets, low interest rates ‘for longer’ and attractive valuations, we remain bullish on emerging markets for the long-term (including on Chinese equities)."
- Biggest GEM — "Not surprisingly, China is now the biggest emerging market in the world, accounting for 18.6% of MSCI GEMs currently, up from 6.5% in mid-2000."
- Structural Change — "The big rise in China’s weight in global markets over the past decade is unrelated to market performance and is explained mainly by definitional changes to the shares included in the major indices (the Red Chips entered MSCI GEMs in June 2000) and to a huge rise in new listings over recent years."
- Why? — "China’ s leading indicator role may be explained by: i) the sheer size of its economy; ii) China’s role as, by far, the biggest consumer of commodities in the world (around 40% for some and close to 70% for iron ore); and iii) the recent tendency of the large Chinese equity market to move to extremes."
- Normalization — "The slowdown in the Chinese economy should continue, cutting year-on-year GDP growth to a trough of around 8% in 2011 Q1 – still, not a ‘hard landing’. Given that and inflation at around 3%, our China macro team expects policy to move to Neutral in the second half of 2010 with no rate hikes at all."
- China Strategy — "Our Chinese strategist, Minggao Shen, has turned more positive and expects the Shanghai Composite to rally by a further 5-15% to 2,800-3,100 by end-2010, based on: i) the economic slowdown being largely priced in; ii) policy headwinds are easing; iii) the massive liquidity drain in H1 2010 from the flood of IPOs etc. has likely ended; and iv) margin squeeze may have peaked."
- Asia Strategy — "Our Asian strategist, Markus Rosgen, has cut the size of his Underweight in China, on more attractive valuations and a slightly more bullish view on regional real estate; he looks to add to the market over the summer."
- GEMs Strategy — "We are currently Neutral in China in our GEMs portfolio. Given the analysis in this report, the recent strong rally in Chinese equities is important for global equities as a whole. However, with emerging markets looking somewhat overbought short-term, we also look to add to China mainly on weakness."
- Bullish — "Based on ‘no double-dip’ scenario, solid growth in emerging markets, low interest rates ‘for longer’ and attractive valuations, we remain bullish on emerging markets for the long-term (including on Chinese equities)."
Citigroup Global Emerging Markets Strategy 20100803
No comments:
Post a Comment