China Stocks to Outperform in 2012: Strategist
After spending most of last year in negative territory, Chinese stocks have the biggest upside potential in 2012, according to Cedric Ma, Senior Investment Strategist at Convoy Asset Management.
"As long as there are no black swan events, China should outperform," Ma told CNBC, adding that emerging markets like China have been lagging in the last few years.
The Shanghai Composite Index was down almost 22 percent in 2011, and was one of the worst performing markets in the region, hurt by global volatility, concerns about a hard landing in China and the size of China's local government debtwhich stood at $1.6 trillion at the end of 2010.
But Ma believes China will be able to avoid a hard landing. "China has sufficient resources and political will to solve most problems and a soft landing is very likely," he said.
Ma believes this is likely to help push Chinese equities higher. The Shanghai Index has already seen a steady uptick since the government announced a 50 basis point cut in the reserve requirement ratio for commercial lenders in mid-February. And hopes of more cuts to support growth have kept the index at its highest level in three months.
And with the market still far off it's lofty levels in 2008, the Chinese market continues to look attractive.
"If you are looking at the PE in global markets, Hong Kong and China, other than Russia — are basically quite low, under 10," he pointed out. "There is some catchup to do."