高盛：China: Portfolio Strategy——2008 outlook: Positionin a tricky cycle

1.A front-loaded, volatile year of returns：While long-term fundamentals continue to look promising, we forecast total returns of 8.8% and -11.3% for offshore-listed stocks and A shares, respectively, for 2008, due largely to normalization of price multiples. We think euphoric sentiment and liquidity could potentially propel Chinese stocks to unsustainably high levels in 1H08 before they subsequently retrace on growth, margin, and valuation concerns

2.Slower macro growth and strained valuations：Slower external demand, less accommodative financial conditions, and the government’s tightening bias may put China back to trend growth. Valuations have outpaced fundamentals and potentially decelerating EPS growth could imply meaningful multiple compression risks.

3.Key themes for 2008：(1) Return to A-share listings; (2) Further currency appreciation; and, (3)Olympics aftermath.

4.Strategies: "3 D's" for H; quality/value for A We will focus on “3 D’s” strategies to potentially achieve alpha opportunities in the H-share market. For A-share investors, we believequality, value, scarcity, and premium are the key words to remember