发帖
雷达卡
Strategy and Economics
One Country, Three
Economies: Play the
Regional Disparity in China
Where we differ: Different regions in China will likely
demonstrate a pronounced divergence in growth trends
during this global recession, in our view. While the
strength of Chinese authorities’ anti-crisis policy
response is determined by the adverse situation in those
regions that have been hardest hit by the crisis, the
policy response will likely be largely non-discriminative
across regions reflecting the particular nature of China’s
central-local government relationship.
Conclusions: The policy support received by those
regions that have been less affected by the global
recession will likely more than offset the negative impact
of external demand shocks. In this context, businesses
that are more exposed to the regional economies that
are less affected by the global recession could do
substantially better than China’s macroeconomic
situation would suggest. We rank China’s 30 provinces
by their potential economic performance amid the
current global recession by factoring in not only the initial
negative impact of the external shocks on the local
economies but also the policy support received by each
region. As the uncertainty surrounding the
macroeconomic outlook diminishes, identifying firms
that are well positioned to benefit from the regional
economies expected to substantially outperform the
national economy will likely become an important
investment theme.
Stock Ideas: Our investment thesis is to overweight
exposure in underdeveloped Western and Central China,
which has better demand resilience and growth potential
against the current economy backdrop, versus the well
developed Eastern Coast, which might recover later.
We overweight Dongfeng Motor against Denway Motors,
China Rail against CCCC, Sinoma against Anhui Conch,
and Perfect World and NetEase against Clear Media.
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