China valuations offer a good buying opportunity

Feb 17, 2009

  • China valuations are very close to their trough levels

Hong Kong, 17 February 2009:  J.P. Morgan Asset Management (JPMAM) believes that MSCI China valuations are very close to their trough levels, either on a P/E or a P/B measure.  While we expect to see more downgrades to corporate earnings estimates, the majority of downgrades has been completed.  Additionally, if history is any guide, equity markets generally bottom out some months in advance of the earnings and economic cycles.  Therefore, we believe value has emerged in certain sectors/stocks, offering a good buying opportunity to investors with a 12-month or longer time horizon.

Speaking at JPMAM's press conference today, Mr Emerson Yip, an Investment Manager of JF Hong Kong Fund and JF Greater China Fund commented, "We remain optimistic about the longer term prospects for China's restructuring and economic growth.  Although recent economic data confirmed that China was unable to escape the fallout from the financial turmoil and global recession, we are still looking at around 7% GDP growth for 2008, working on the assumption that the policy stimulus will work and generate the expected multiplier effects.  Chinese policymakers have been waging an all-out campaign to revive economic activity.  We, therefore, expect to see sequential improvement in the second half of 2009."

"Our Hong Kong portfolio continues to be tilted in favour of the Mainland Chinese markets.  In particular, we remain convinced that China's consumption trends will continue to support our favourable long term investment case.  Given the de-leveraging impact on local corporate and marginal households in Hong Kong, we will adopt a dual strategy of increased emphasis on defensive and value names, coupled with China exposure at an attractive price.  For now, our Hong Kong and China portfolios stay defensively positioned and maintain a tactical cash position for ready deployment.  We continue to retain a preference for companies with solid balance sheets, earnings visibility and strong cash flows."

On the separate topic of JPMAM's latest business initiative in the Hong Kong mutual fund industry, Terry Pan, Head of Retail Business said, "We had a successful launch of the JPM Investment Academy, the first of its kind in the Hong Kong investment industry.  Over 230 local investors attended the first of 20 courses – 'Investment Funds – Are you really protected?' last week.  The feedback from participants was pretty encouraging.  More than 85% of them were either "Satisfied" or "Very Satisfied" with the course.  In addition, 97% of the participants are interested to join the other 19 courses and 98% will recommend them to their friends.  As a result, we have seen an increase in the number of enrolments.  We believe that investor education is not only important for local investors, it is also in great demand."

"The JPM Investment Academy is an education programme which aims to provide attendees with a better understanding of the investment industry.  It consists of 20 courses covering four key modules: Module 1) Fund Insights; Module 2) Portfolio Insights; Module 3) Economic Insights and Module 4) Strategy Insights." added Mr Pan.  "Apart from these areas, participants have expressed a strong interest in hedge funds and related topics.  Many of their suggestions will be incorporated into the programme in the future."

Local investors are invited to attend as many or as few courses as they wish.  Upon completion of all courses in a module, participants will receive a Certificate of Attendance.  Those who would like to attend the course may simply call the enrolment hotline at 2265 1033 to register.

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For further information please contact
Daniel Chui, Head of Investor Communications
Telephone: (852) 2800 2874
Issued by JPMorgan Funds (Asia) Limited

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Notes to Editors

J.P. Morgan Asset Management ("JPMAM") is the brand name of J.P. Morgan Chase & Co's asset management companies.

J.P. Morgan Asset Management is a global asset management leader providing world-class investment solutions to clients. With US$1.1 trillion in assets under management (the Asset Management client funds of J.P. Morgan Chase & Co. as at 31 December 2008) and offices in 40 locations around the world, J.P. Morgan Asset Management offers global coverage with a strong local market presence, and leadership positions in most asset classes.

Commitment to Hong Kong
JPMAM's investment management business in Asia has remained headquartered in Hong Kong for more than three decades and today has about 500 employees based in this location. JPMAM and its investment arm - JF Asset Management - are one of the largest local investment managers in Hong Kong with over US$74.6 billion (31 December 2008) of funds managed across the Asia Pacific region.

As part of a major global investment group, we are committed to providing specialist teams with the resources needed to deliver successful products and performance to our clients. The Hong Kong-based Pacific Regional Group, together with the local presence of the Global Portfolios Group, forms the core of JPMAM's investment management operations. In addition to the knowledge and experience of our individual investment professionals, the stability of the team has enabled JPMAM to develop strong relationships with local clients.

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