GS 高盛-中国每日报告 07.23

China-Daily-Insights 07.23 10页

Today’s focus
China: Portfolio Strategy: Interest rate hike: Not a surprise China Views: First impression: The PBOC raised interest rates by 27 basis points
China Views: China cut the tax on interest income to 5% from 20%
China: Banks: Rate hike positive for macro, slightly negative for NIM; be selective
ASM Pacific Technology (0522.HK): Positive supply chain datapoints suggest strong 2H2007
Headline news
SASAC: Central SOEs cut to 155 (China Daily)
Clean production evaluation standards issued (China Daily)
500 mln users mark China's 20th anniversary of mobile communications (Xinhua)
China's power output, consumption up more than 15 pct in first half (People’s Daily)
China: Portfolio Strategy: Interest rate hike: Not a surprise, Thomas Deng, CFA
• A continuation of policy normalization. Upon stronger-than-expected 1H2007 GDP numbers and rising inflation pressure, the Chinese central bank and the State Council hiked 1-year interest rates by 27bp and reduced the interest tax respectively, on Friday July 20, as a part of the Chinese government's lengthy policy normalization process and to caution potential economic overheating.
• Well-expected moves; limited market impact. Government official's public comments and widespread media reports regarding potential near-term tightening moves suggest these policy amendments are well-anticipated by the both A- and H-share markets.
• At the margin, however, the A-share market could face pressure given its liquidity-driven nature. On the other hand, we remain long-term positive on the H-share market as prevailing real rates are still in negative territory (-1.2%) after these moves. That said, we think there is a chance the market may take this as a profit-taking excuse, especially on those investment related sectors like materials and property.
• Strategies: From defensive to offensive. While defensive sectors could outperform near term after the interest rate hike, we would be aggressively looking for entry points in names with strong fundamentals, and potential for EPS upward