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UBS sees H share index to hit 15500 by mid-’10

[Date:12-02-2009] Source: Infocast News
UBS set a mid-2010 HSCEI index (H share index) target of 15500 and an MSCI China target of 75.

The brokerage believes strong economic growth, improving corporate earnings, an accommodative macro policy, and continued abundant liquidity will probably translate into a big bull market for China in the first half of next year.

MSCI China is trading at 13.4x prospective 2010 profit. UBS said the valuation is reasonable, in line with its 13-year average. Meanwhile, its H share index target implies 16.5x PE and 2.5x price-to-book on 2010 projection.

The brokerage overweight real estate, insurance, banks, consumer discretionary (auto, retail), cement, oil & gas, and capital goods and underweight IPPs, airlines, shipping, telecom, and toll roads.

Sinopec (HKG:0386), China Life Insurance (HKG:2628) , Guangshen Railway (HKG:0525) and Renhe Commercial (HKG:1387) are among stocks on the brokerage’s most preferred list. At the same time, China Mobile (HKG:0941) , Air China (HKG:0753) and China COSCO (HKG:1919) are on the least preferred list.

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