Experts' views

A technical rebound will make China's A-share market climb to 4,200 points in the second quarter, but a temperate "bottom" will appear in the same period.

Investors needn't be discouraged by the sagging index, as it will bring favorable investment opportunities to find the undervalued stocks. Concretely, in the investment portfolios, the investors can buy 30 percent stock while the index is 3,400 points, and increase the stock by 50 percent and 70 percent, when the index drops to 3,000 points and 2,800 points.

- Xu Yiding, strategy analyst with Changjiang Securities Co

It can be a bull market even with high inflation. The keystone of the stock market is a fundamentally strong economy.

The performance of the Indian stock market in 2006-07 fiscal years is a case in point. In that period, India was suffering inflation with a CPI index reaching 5.2 percent, but the GDP growth rate was about 9.6 percent. So, the stock market remained bullish, even though the government increased the interest rate and took some macro-tightening measures to control inflation.

- Zhai Peng, analyst with Guotai Jun'an Securities

Launching the second board won't put much pressure on the main board. In America, Britain and South Korea, the main board didn't fluctuate significantly before and after the second board was launched.

Besides, the second board can spur the development of hi-tech companies and maybe stimulate the sluggish main board.

- Yang Zongyao, analyst with China Jianyin Investment Securities

China's GDP growth rate could reach about 10.5 percent as the investment and consumption momentum remains strong this year.

Spurred by the Olympic Games, the country's consumption will jump to a high level this year. Based on the analysis of four Olympic host countries, we find this rule during an Olympic year.

The snow disaster and vulnerable infrastructure in China's central and western regions will stimulate infrastructure investments. Meanwhile, the demand to invest in environment-friendly equipment will be high, as the government is strengthening the requirements for energy savings and emission reductions.

- Ha Jiming, China International Capital Corp Ltd chief economist

The impact of the conversion of non-tradable shares into tradable ones will be eased in the second quarter.

According to the latest market value, the total conversion of non-tradable shares into tradable ones is about 2,600 billion yuan, and the peaks will take place in February, March, August and December, with more than 300 billion yuan each month.

Further more, wise shareholders won't sell promising shares. Though some prefer to sell, but the shares can be bought as long as their valuations are reasonable. So investors needn't too panic even during the conversion peaks.

- Qin Xiaobin, analyst with China Galaxy Securities

We favor stocks in the banking sector and predict the average corporate profits of this industry will increase to 40-50 percent this year.

The favorable factors include the strong demand for loans, a lowered tax rate, wide interest rate spreads, improved bank balance sheets and high capital adequacy ratios.

The reserve requirement ratio may be increased to 17 percent this year, but the large-scale commercial banks with stable capital resources will remain promising.

- Gong Fangxiong, chief economist with Morgan Chase Bank

(China Daily 05/03/2008 page3)