20160106-高盛-AsiaPac_2016__Continuing_19页_785kb

AsiaPac 2016: Continuing Challenges, Select Opportunities Summary

Core Content

This document provides an analysis of Asian equity markets at the beginning of 2016, highlighting the challenges and opportunities facing the region. The report is authored by Goldman Sachs and outlines the firm's portfolio strategy, return expectations, and market allocations for the year.

Main Views

• Tough Start to 2016: Asian markets had their worst-ever start to the year, driven primarily by concerns over China's economic growth and currency weakness.
• Growth and Currency Concerns: The selloff in China's equities has created a ripple effect across the region, with growth concerns and CNY/CNH depreciation being the main drivers of investor anxiety.
• Low Return Expectations: The report forecasts 7% USD price returns for the region in 2016, with 10% USD total returns incorporating 4% FX depreciation and 3% dividend yield.
• Soft 1Q Expectations: The firm expects a soft first quarter due to the impact of the Fed's tightening and a likely sequential slowdown in China.
• Market Allocations: The report suggests an overweight position in India, Indonesia, and the Philippines, which have the highest growth potential and improving cyclical momentum. Underweight positions are suggested for Hong Kong, Korea, Malaysia, and Thailand.
• Sector Focus: The firm favors defensive sectors such as Telecom Services, Software & Services, Consumer Staples, Insurance & Financials, Utilities, Health Care, and Banks. It underweights sectors like Consumer Retail & Services, Tech Hardware & Semis, and Capital Goods.

Key Themes and Implementation Ideas

1. Growth Divergence:

   • New vs. Old Asia: The report identifies a structural shift in growth drivers, with "new" Asia (e.g., tech, consumer services) expected to outperform "old" Asia (e.g., manufacturing, energy) due to higher earnings growth (20% vs. 10% CAGR).
   • Government Capex Spending: Increased public capital expenditure in India and Indonesia may benefit infrastructure-related sectors.
   • Commodity Price Divergence: Lower-for-longer commodity prices are expected to benefit downstream sectors over upstream ones, with greater downside for "capex" commodities compared to "opex" commodities.

2. Rate Divergence:

   • US Rates to Rise: The firm anticipates further US rate hikes, while most Asian markets remain in a loose monetary environment.
   • High Yielding Stocks: Despite rising US rates, high yielding stocks in Asia are expected to outperform low yielding ones due to continued loose financial conditions in the region.

3. Earnings Stability:

   • Stable Growth Stocks: The firm favors high-quality stocks that deliver stable earnings, as growth remains scarce.
   • Stable Growth Basket: The stable growth basket (GSSZSTGW) has outperformed the MXAPJ index by 16% since its inception.

Risks

• Growth Shortfall: A continued lack of growth is a key downside risk for equities.
• CNY Weakness: Concerns over a potential significant devaluation of the Chinese yuan, which could negatively impact regional equities and currencies.
• US Monetary Policy Tightening: Uncertainty around the pace and impact of US rate hikes adds to the risk for Asian markets.
• Earnings Revisions: Earnings expectations have been revised down significantly, particularly in China, with a 18% decline in 2015 and 2% decline in December alone.

Supporting Data

• Historical Performance: The report notes that a negative first-day return does not reliably predict poor first-quarter or full-year performance, except in China, Korea, and Singapore.
• Market Correlation: North Asian markets are more correlated with China equities due to stronger fundamental linkages.
• Revenue Exposure to China: Markets with higher revenue exposure to China tend to have more correlated first-day returns with China.
• Macro Data: Recent macroeconomic data in the region have been mixed-to-soft, with China's PMI at 49.7 for December, below consensus and below 50 for the 10th consecutive month.
• Policy Actions: In December 2015, China emphasized supply-side reforms, while other Asian countries adjusted their monetary policies in response to the economic environment.

Analysts and Contact Information

• Timothy Moe, CFA: +852-2978-1328 | timothy.moe@gs.com | Goldman Sachs (Asia) L.L.C.
• Richard Tang, CFA: +852-2978-0722 | richard.tang@gs.com | Goldman Sachs (Asia) L.L.C.
• Sunil Koul: +852-2978-0924 | sunil.koul@gs.com | Goldman Sachs (Asia) L.L.C.
• Kinger Lau, CFA: +852-2978-1224 | kinger.lau@gs.com | Goldman Sachs (Asia) L.L.C.
• Nitin Chanduka, CFA: +65-6654-5445 | nitin.chanduka@gs.com | Goldman Sachs (Singapore) Pte.
• Ki Cheong Wong, Ph.D: +65-6654-5393 | kc.wong@gs.com | Goldman Sachs (Singapore) Pte.
• Alvin So: +852-2978-1585 | alvin.so@gs.com | Goldman Sachs (Asia) L.L.C.

Key Takeaways

• The report is a strategic guide for investors in the Asia-Pacific region for 2016.
• It emphasizes growth visibility and earnings stability as the main themes for investment.
• Defensive allocations and targeted opportunities are highlighted, with a focus on sustainable growth.
• CNY depreciation and US monetary policy are key risks that could affect regional returns.