􀀗 China’s government to announce
details for 10 industry stimulus policies
􀀗 Stock market likely to be event-driven
􀀗 We identify six angles to play this theme
From Mr. Big to Mr. Strong
This report aims to help China equity investors better
navigate, and hopefully profit from, industry policy risks in
the coming months. At the close of the NPC meeting,
Premier Wen complained that the western media focused too
narrowly on public spending and investment when reporting
China’s stimulus package; he preferred to stress the
importance of wide-ranging plans to revitalize the country’s
industry. In our view, the focus of Beijing policymakers, and
therefore the market, will shift to industry policies.
In Jan-Feb. 2009, Beijing announced headline stimulus
policies for 10 major industries, with details due in the
coming months. The industries are: auto, steel, textile,
machinery, ship building, electronics & IT, petrochemicals,
light industries, non-ferrous metals and logistics. These
policies aim to: i) pump-prime short-term demand growth
and ii) speed up industrial upgrading for longer-term
structural adjustment to solve overcapacity issues, facilitate
innovation and brand building, and move up the value chain.
Although the long-term effects remain to be seen, eventdriven
opportunities resulting from the announcement of
policy details should not be overlooked. This report
includes:
􀀗 Six angles to play the industry revitalisation theme (P2).
􀀗 Summary table for key stimulus policy highlights,
industry profiles and likely beneficiaries (P4-5).
􀀗 Top-down policy analysis (P6-9) and bottom-up views
from HSBC analysts on policy impact (P12-25).
HSBC top picks: Maanshan, Shanghai Electric, Dongfang
Electric, ZTE, AAC, AUO, Sinopec, China Bluechem,
China Agri, Yurun Food, Sinotrans, Sinotrans Shipping (see
P12 for summary). We also include a valuation screen for
100 companies across A and H-share markets that are worth
watching (P28-29).