From December 13 to 14, 2012, the China Merchants Securities held an investment strategy meeting titled “New Pattern and New View” for 2013 in Shenzhen. Mr. Li Tie, Director of the Center for Development and Reform of Cities and Small Towns under the National Development and Reform Commission, attended and gave a keynote speech on urbanization and economic issues in China at the meeting. The China Merchants Securities gave a series of investment strategy reports on macro economy, A-share market, H-share market, and the business of the company at the meeting.

 

In addition, nearly 70 key public companies and investors, such as Gemdale, China Merchants Energy Shipping Co., Ltd., Ping An Bank, SAIC Motor, Shenhua Group, ZTE, and Baosteel, from 23 industries were invited and exchanged ideas deeply at the meeting.

Mr. Ding Anhua, chief economist of China Merchants Securities, gave basic opinions of the macro-economy management team of China Merchants Securities about the macro-economic situations in 2013: the potential economic growth of China will slow down and it will be the keynote of macro control to keep the economic growth steady; proactive fiscal policy will continue prevailing, the overall thinking of monetary policy is generally similar to that for 2012, and the space of monetary policy will be smaller than that of fiscal policy for the existing inflationary pressure; it is anticipated that the economic trend in 2013 will be high first and low then, the whole-year GDP will increase at about 8.1%, and the earnings of industrial enterprises will increase at about 7%; as a result of economic changes, the inflation in 2013 will be at a higher level than that of this year averagely; and it is estimated that the annual CPI in 2013 will be 3.1%, increasing quarter by quarter.

The strategic research team of China Merchants Securities pointed in the reports that a complete falling market will have two steps, falling valuation and falling profit. The falling A-share market was caused mainly by falling valuation in 2011 and by falling profit in 2012. At present, the bubble of A-share valuation has been basically eliminated and subsequent market trend will mainly depend on changes in the enterprise profits. According to the judgment of the strategic research team of China Merchants Securities, the inventory cycle adjustment has come to a close, the economy, both the real economy and the enterprise profit, will recover moderately and the stock market will also recover gradually in 2013.

  

In 2013, it is an idea of our industrial allocation to look for the industries in which de-stocking has been completed basically and capacity input is not large. In the circumstances that the economy recovers slightly, the prices and profits of these industries will have relatively sensitive responses. It is advised that more investment is made in real estate, home appliances, cement, steel, railway equipment, and securities in the first half of the next year; after the circle of the investment is over, investment in medicines, pharmacy and the food, beverage, and apparel which are under de-stocking should be made in the second half of the next year; attention should be paid to such industries as power, computer, and feed of which the profitability improves continuously for cost reduction; and thematic investment should be made in urbanization and environmental protection.