March 10, 2009
Greater China
Economics
Issues in Focus
China: 2009 GDP Recovery Unlikely to Boost Profit
or Equities
Although China’s aggressive policy stimulus should
bring about a GDP growth recovery in 2H09, the poor
quality of policy-driven growth should translate to
corporate profits or equities performance. Absent a
recovery in the G3 economies, China will not be able to
sustain a growth rebound through 2010, in our view.
And without substantial stimulus augmentation, capacity
retrenchment and the private capex slowdown will
worsen and further depress the equity market.
Hong Kong: F09/10 Budget – Not as Generous
When Needed
In the most recent announced F09/10 budget, fiscal
concession was much downsized as government
focuses on job preservation and long-term development.
With such limited immediate stimulus, we maintain our
2009 GDP forecast at -3.8%.
Taiwan: Can’t Get Any Worse?
Taiwan is already in a deep recession of unprecedented
length and depth. Growth rate could plunge further but
expectation and sentiment cannot get any worse, in our
view. We think any upside will be on more fiscal
stimulus from the government.
China
China Strategy and Economics: Policy and Liquidity Pumped
Rally to Be Tested by Macro
4
China Strategy and Economics: 2009 GDP Recovery Unlikely
to Boost Profits or Equities
7
February Data Preview: Assessment Affected by CNY
Distortions
17
Hong Kong
Deeper into the Recession 18
F09/10 Budget - Not as Generous When Needed 20
Taiwan
Can’t Get Any Worse 26
No Surprise Today 29
For