Salient to Investors:
Noah Weisberger at Goldman Sachs said:
- The Hang Seng China Enterprises Index will rise 18 percent to 13,600 by the end of 2014, the biggest gain since a rise of 62 percent in 2009, on prospects the economy will stabilize.
- Commodities will lag the rally in equities.
- Buying Chinese stocks and selling copper futures may generate a combined return of 25 percent next year. Stability in China’s growth is insufficient to lift demand for copper as a supply glut weighs on the market as economic growth is driven by the developed market.
- Equities are Goldman’s favorite asset class in an environment where growth is moderate but not overheating, while policy makers remain accommodating.
The median economist predicts China’s GDP to grow 7.5 percent in 2014.
The Hang Seng China Enterprises Index is at 19 percent below its average valuation of the last 5 years.
Allan Conway at Schroder Investment Mgmt has been positive for China for some time and is overweight Chinese stocks with 22 percent of his portfolio.
Goldman recommends buying S&P 500 futures while selling the Australian dollar; betting European interest rate swaps will decline while 5-year Treasury yields will rise; and selling the Canadian dollar.
Read the full article at http://www.bloomberg.com/news/2013-12-02/goldman-says-buy-h-shares-amid-growth-china-overnight.html
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