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Jun 07,2016 13:41:39
Asia in Transition – New Economy Pushing Ahead in a Stop-Go World

With China’s old economy sectors decelerating but domestic-demand, service-sector led new economy expanding, we see the economy progressing on a dual speed path and continue to advocate switching from old to new economy sectors. That said, Bank of Singapore Economic Team believes it remains a huge challenge for China to transition quickly enough to grow out of the credit bubble. Hence a continued “Stop-Go” policy approach is likely, swinging from short-term stimulus when activity starts to stall to fading support and reforms emphasis when economic growth picks up. Near-term sentiments could remain cautious with unclear policy direction following recent conflicting statements from different policy makers. Within the “new economy” universe, we like consumption and service related sectors including internet, insurance, telecoms, gaming and autos. New energy/environmental is also a preferred sector with strong policy support for environment protection. Our preferred picks include Alibaba (US:BABA), Ctrip (US:CTRP), Ping An Insurance (HK:2318), China Mobile (HK:0941), Sands China (HK:1928), Brilliance China (HK:1114) and Beijing Enterprises Water (HK:0371).
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