Goldman Sachs:Buy China Stocks On Econ Growth;Light PositioningLast update: 3/31/2010 1:26:09 PMNEW YORK (Dow Jones)--Goldman Sachs recommended a new top trade Wednesday in Chinese equities via the Hang Seng China Enterprises Index. The closely watched investment bank says that the timing is ripe for China's stocks, which have underperformed the developed world and other emerging markets over the past nine months, amid rising expectations for tightening monetary policy in China. The target for this position is for the index of companies with shares listed on both the Hong Kong Stock Exchange and the Hang Seng Mainland Composite Index to reach 15,000, about 20% above current levels. Still, Goldman analysts expect the index to reach 17,000 in December, and favor the bank sector in particular. "[We] sense that Chinese equities have fallen off investors' radars somewhat, positioning is light, and sentiment is, at best, skeptical, making us all the more keen to get involved," analysts said in a note to clients. Goldman stresses that China's economic growth remains robust. The bank forecasts real gross domestic product to grow to 11.4% in 2010, above the market consensus of 9.9%. "The most obvious risk here is that we are too early to this trade," said the note. Analysts say that a hike in interest rates or if China is cited as a "currency manipulator" in the semi-annual Treasury report due in the middle of April could knock down stocks markets. "Despite these risks, we note that 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," said Goldman. -By Riva Froymovich, Dow Jones Newswires; 212-416-2217; firstname.lastname@example.org (END) Dow Jones NewswiresMarch 31, 2010 13:26 ET (17:26 GMT)
this play will become interesting for big players once it reaches 5 $. Before a significant surge the company will have to publish fundamentals, strategy and outlook. Now is the time to build up positions for speculative investors. Others shall wait and jump in when it reaches new highs. I prefer being positioned at current levels.