Deutsche Bank delivers its 2010 China investment strategy at DB Access China Conference
Deutsche Bank today outlined its 2010 China economic and market outlook at the Bank’s 8th annual DB Access China Conference in Beijing. The forum, held 11-14 January and attended by 1,000 investors, is one of the largest investor conferences in China.
The keynote presentation was delivered by Dr. Jun Ma, Deutsche Bank’s Chief Economist for Greater China, rated the No. 1 Asia Economist and joint No. 1 China Analyst in the Institutional Investor 2009 All-Asia Research Team Poll. Dr. Ma expects China’s 2010 GDP growth to accelerate slightly to 9.0%, and for growth in 2011 to remain largely unchanged.
“Uncertainty regarding CPI and asset inflation will pose more significant risks than economic growth volatility in 2010,” said Dr. Ma. “At the GDP components level, exports will significantly increase their contribution to growth, while investment will see a major decline in its contribution from 80% in 2009 to around 50% in 2010. Consumption as a whole should continue its steady growth,” he said.
Dr. Ma noted that structural reforms during the year would focus on addressing significant economic imbalances. “We believe several reforms could have a meaningful market impact in 2010. In our view, investors should pay particular attention to measures aimed at promoting consumption growth, a low carbon economy, healthcare, and urbanization,” he said.
Regarding equity strategy, Dr. Ma forecasts average MSCI China index upside potential of around 15% in 2010. “We forecast upside to the indices in the first few months of the year, as the macro environment should remain favorable,” he noted. “However, key risks such as deceleration of year-on-year growth, significant policy tightening, a second dip in the United States, and the unwinding of USD carry trades, could negatively affect market performance from Q2.”
Deutsche Bank highlighted several themes which could provide investment opportunities during 2010:
- Inflation: Sectors positively leveraged to inflation include insurance, consumers, and soft commodities
- Under-penetrated consumer: Key areas include life insurance, air traffic, cosmetics, online travel, medical equipment, fragrances, and disposable diapers in low tier cities and rural areas
- Export recovery: Beneficiaries will likely arrive in three waves; first (mid-2009 to mid-2010), container shipping, ports, trading, and export manufacturing in the textiles, electronics, furniture shoe and toy sectors; second (end-2010) port machinery; and third (2012), shipbuilding
- Low carbon economy: In line with China’s goal of cutting carbon emissions by 40-45% per GDP unit by 2020, beneficiary industries are likely to include wind, nuclear, and integrated gasification combined cycle equipment manufacturing
- Consolidation: Industrial consolidation is likely to be a structural long-term positive for key players in the raw materials sector, including steel, cement, glass, and coal
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About Deutsche Bank China
Deutsche Bank (China) Co., Ltd. is a wholly-owned foreign-funded subsidiary of Deutsche Bank AG and is incorporated in the People’s Republic of China. Headquartered in Beijing, Deutsche Bank China now operates branches and sub-branches in Beijing, Shanghai, Guangzhou and Tianjin with over 500 employees.