This content is from: Research
The 2013 All-China Research Team: Portfolio Strategy, First: David Cui
For a third consecutive year, David Cui of Bank of America Merrill Lynch is money mangers’ favorite in this sector, earning particular praise for his “very different way of approaching strategies,” in the words of one client, “including providing anecdotal evidence to back up his thinking.” Cui, 45, is exercising caution. He expects the Hang Seng China Enterprises Index to fall to 9,560 by the end of the year, representing a 10 percent decline from its level at the end of October. A potential further pickup in inflation is one risk, he notes. Another is government tightening of property policies, such as measures that could make mortgages more difficult to obtain or a strengthening of home purchasing controls in cities where housing prices have risen too quickly — or even the sale of more land to boost residential property supplies, he says. In addition, the shadow banking system is “inherently unstable,” Cui notes, which is another source of potential uncertainty. That network includes commercial banks’ off-balance sheet arrangements, direct financing channels, pawn shops, trust companies and underground lenders. It is, he believes, the “weakest link in the whole financial system,” with “grossly inadequate” risk controls. Against this background, he advises investors to remain defensive, overweighting sectors like consumer, gas, health care, telecommunications and utilities; and underweighting financials, property, resources and other investment-driven segments. — Carolyn Koo |
