20140630-申万宏源研究_香港_-2014年7月海外股票市场投资策略_从悲观到中性_27页_822kb

Strategy Research Summary: Bringing China to the World (June 30, 2014)

Core Content

This report outlines the investment strategy for overseas Chinese stock markets in July 2014. It discusses the shift in policy stance, the role of monetary easing, and sector-specific valuations and recommendations. The key focus is on the government's response to economic challenges, particularly the slowdown in real estate investment, and how these measures may influence the stock market.

Main Views

• Policy Shift: The Chinese government has started to adopt more proactive measures to stabilize the economy, including administrative interventions to prevent liquidity crises and monetary easing through various instruments.
• Monetary Policy: The People's Bank of China (PBoC) has implemented targeted RRR cuts and is expected to continue with further monetary easing, including interest rate cuts, re-lending, and open market operations.
• Sector Valuation: Several sectors are currently undervalued and offer good investment opportunities, including banks, insurance, oil & gas, real estate, and automobiles. Conversely, sectors like coal, construction materials, and metals & mining are considered overvalued or less attractive.
• Economic Outlook: The economy is expected to stabilize in the second half of 2014, with a recovery likely in the fourth quarter. However, the high base from the third quarter of 2013 may delay material improvements in the third quarter.

Key Information

Policy Interventions

• Trust Product Risk: The government has taken steps to mitigate the risk of trust product defaults by requiring shareholders to bear the risk and increasing capital injections in trust companies.
• Real Estate Policy Relaxation: Seven cities have relaxed real estate purchase restrictions, and the PBoC has encouraged banks to support first-time homebuyers.
• Fiscal Policy: There has been a significant increase in fiscal spending, particularly in infrastructure, but the stimulus is expected to last only three months without further property market reforms.

Monetary Easing

• RRR Cuts: The PBoC has conducted two rounds of targeted RRR cuts, releasing Rmb100bn and Rmb80bn in liquidity.
• Liquidity Improvement: The report anticipates a material improvement in overall liquidity by July 2014, driven by continued monetary easing measures.
• Loan Growth: Loan growth has stabilized in May 2014, with new loans increasing by 30% YoY and total loans rising by 14% YoY.

Sector Valuation and Allocation

• Overweight Sectors: Banks, insurance, oil & gas, real estate, automobiles, diversified financials, and transportation are recommended for overweight allocation.
• Underweight Sectors: Coal, construction materials, telecommunications, metals & mining, and machinery are suggested for underweight allocation.
• Valuation Analysis: Banks are considered to have already priced in bad debt risks, while other blue-chip sectors are undervalued and may see a rerating in the coming months.

Economic Data and Trends

• Stabilizing Economy: May 2014 macroeconomic data shows signs of stabilization, with improved exports, consumption, and industrial activity.
• Fixed Asset Investment (FAI): FAI growth stabilized at 16.9% YoY in May, supported by increased fiscal spending and infrastructure investment.
• Electricity Consumption: Electricity consumption growth increased from 4.6% YoY in April to 5.4% YoY in June, indicating improved industrial activity.

Sector Recommendations

Conclusion

The report concludes that the Chinese government's interventions in both fiscal and monetary policies are aimed at stabilizing the economy and supporting growth. With the expectation of continued monetary easing and potential real estate policy relaxations, the market is anticipated to re-rate, offering opportunities in certain sectors while presenting risks in others. Investors are advised to overweight sectors such as banks, insurance, and real estate, and underweight sectors like coal and metals & mining.