China Market Thoughts – Downside earnings risk to MSCI China due to the economic deceleration $CAF

• China Market Thoughts – Downside earnings risk to MSCI China due to the economic deceleration due to the combined ripple effect of the crackdown on the property sector and the slowdown in banks’ lending to local government-funded investment projects; 
• Policy risks such as the resource tax, which may hurt earnings of and de-rate multiples of energy and upstream resources companies;  tight liquidity situation in China
• Possible additional tightening measures in property and FAI areas. The uncertainties on domestic and external front, you should continue to stick to sectors with most visible growth, such as consumer staples, and low- and middle-end consumer discretionary sectors whose sales are least affected by the economic slowdown. 

J.P.Morgan Chase & Co. Credit Improvement Playing Out; Most Bullish Price Target of $61 +28% $JPM

Investment Thesis
•We are Overweight JPM given its earlycapital markets and card businesses and stronger risk management relative topeers and strong capital levels.
•Accretion from the WM acquisition driveshigher earnings growth going forward.
•Expect JPM’s stronger balance sheet willenable it to take share.

Key Value Drivers
•Card – Declining early stagedelinquencies should lead to modestreserve release and losses peaking inearly 2010
•Retail - Declining early stagedelinquencies should lead to lowerreserve build and losses peaking in early 2010
• Investment Bank - Taking share withinvestment spending in IT and fill-ins(Sempra) and as clients access its strongbalance sheet.
• TSS- Benefiting from volatility in capitalmarkets

Potential Catalysts
• Card NCO decline
• Continued reserve release
• Improving market share gains in capitalmarkets activities
• Efficiency improvements in higher marginconsumer loans

Adding Bank of America (BAC) to the U.S. Focus List

Investment Thesis: The IPC believes the risk/reward proposition on BAC’s stock is very attractive at current levels as we think BAC has many under-appreciated earnings levers and looks extremely cheap at 6x our estimated normalized earnings. We believe 2010 will be an important inflection point in terms of EPS and book value growth. Much of this growth will be driven by improving credit quality in 2010. This process has already begun as growth in non-accruals has improved for three quarters. We also see the recent TARP repayment as removing a significant FULL REPORT HERE
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