Top Down Strategy and Large Cap Stock Picks - the DBS Vickers ...

Country Assessment
Regional Equity Strategy Q4 2007
Economic Indicators
2004A 2005A 2006F 2007F 2008F
China
GDP Growth (%) 9.2 9.9 11.1 11.5 10.0
FDI (US$bn) 60.6 60.0 70.0 48.0 45.0
Exports (yoy %) 35.4 28.0 27.0 27.0 24.0
Retail Sales
(yoy %) 17.7 13.0 13.8 15.0 16.0
CPI (yoy %) 4.0 1.8 1.5 4.0 4.4
Hong Kong
GDP Growth (%) 8.6 7.3 6.9 6.0 5.6
CPI (yoy %) -0.4 1.1 2.0 1.8 3.2
Source: CEIC, DBS Bank
Valuation - HSI
Earnings Growth (%)
PE (x)
Yield (%)
06A 07F 08F 06A 07F 08F 06A 07F 08F
Finance 7.9 29.7 14.3 20.2 15.6 13.6 2.6 3.1 3.6
Power, Infrastructure & Utilities -2.5 -3.2 5.2 14.2 14.7 13.9 3.2 3.1 3.3
Properties 18.6 25.4 -21.5 21.5 17.2 21.9 1.8 2.0 1.9
ex Cheung Kong 11.1 12.9 1.0 26.7 23.6 23.4 1.8 2.0 1.9
Hongs/Conglomerates 28.3 45.2 -41.0 18.0 12.4 20.9 2.2 2.5 2.4
ex Hutchison 21.6 -1.9 -5.1 18.4 18.8 19.8 2.3 2.7 2.6
Comm/Ind 26.1 22.0 20.1 20.3 16.6 13.9 2.0 2.5 2.9
Telecom & Media 14.2 17.5 33.1 27.5 23.4 17.6 1.7 2.0 2.6
HSI 14.7 29.9 12.5 20.2 16.2 15.4 2.3 2.7 3.0
HSI ex Cheung Kong and Hutchison 9.7 19.3 14.3 20.6 17.3 15.1 2.4 2.7 3.1
Source: DBS Vickers
Valuation - HSCEI
Earnings Growth (%) PE (x) Yield (%)
06A 07F 08F 06A 07F 08F 06A 07F 08F
Consumer 33.7 30.9 18.5 21.6 16.6 14.0 1.1 1.6 1.9
Energy 11.7 12.4 7.7 22.8 20.0 18.1 1.5 1.7 1.8
Financials 28.9 55.8 34.4 40.1 27.9 21.0 0.7 0.9 1.3
Industrial Goods 18.3 43.1 -3.5 29.4 20.7 21.4 1.2 1.5 1.5
Materials 68.5 22.3 20.3 41.5 36.7 31.5 0.8 0.9 1.1
Utilities 22.5 13.6 10.8 16.8 19.3 17.3 2.8 2.7 3.0
Property & Construction 80.3 59.7 45.0 71.6 55.1 37.7 0.3 0.5 0.6
Services -27.9 50.5 12.5 38.1 26.1 24.2 0.7 1.1 1.3
Telecom & Technology -4.0 3.4 24.5 14.7 14.3 11.5 1.5 1.6 2.0
HSCEI 17.9 30.3 21.7 32.0 25.6 21.1 0.9 1.1 1.4
Ex oil * 21.9 43.7 29.3 39.7 30.4 24.1 0.7 0.9 1.2
Source: DBS Vickers
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