- 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.