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Thursday, April 1, 2010

Goldman touts China

Oh my!!

And it's not an April's Fool! What will the bears do now???

We are recommending a new top trade – a long position in Chinese equities via ‘H’ shares (HSCEI Index), with a target of 15000, about +20% above current levels.Chinese equities have underperformed developed market equities, and also other emerging markets over the past nine months or so. Economic growth has stayed robust and broad based, for 2010 we expect real GDP growth to realize significantly above consensus (11.4% vs. 9.9%), and we are also above consensus for 2011.While interest rates will likely rise soon, this risk is much better flagged than before. Besides, equity valuations are at undemanding levels – 12.6 on 2010 forward earnings and 10.6 on 2011 forward earnings. Despite these supportive fundamental arguments, we sense that Chinese equities have fallen off investors’ radars, positioning is light, and sentiment is, at best, skeptical, making us all the more keen to get involved. The most obvious risk here is that we are too early to this trade. The actual fact of interest rate tightening and the potential naming of China as a “currency manipulator” may be temporary equity market downers even if they are better known today. But Chinese equities already look to have formed a bottom, and we do not want to be late to this move given a robust strategic view.


GS main april 1 -

5 comments :

Anonymous said...

can you provide any help with APWR...it's getting killed again today..i reloaded yesterday but man..it's painful

Anonymous said...

Check out what Stratfor has to say about China...not pretty at all..

http://www.stratfor.com/weekly/20100329_china_crunch_time

Anonymous said...

APWR

its very manipulated to say the least but the selloff is from the lowered guidance they issued. BUT if you read between the lines in the transcript from the horrible translation and check out the 20F you will see that they didnt issue guidance they just stated their backlog. I believe the CEO also said he will be able to give a better outlook at a later date. Also in the 20F they mentioned they are trying to rent a plant to get started on the Texas deal sometime in Q2. This is a clever way of getting around the Schumer/stimulus fund issue. Eventually they will be building a plant in Nevada.

They have the plan. lets see how well they execute it!!!
Good luck

Anonymous said...

Any thoughts on MGM?

Anonymous said...

I picked up MGM jun 17.5s. I'm not expecting it to go up that much, but at 14c I think I can turn em nicely