FIRSTLIGHTASIAWHATSCHANGEDRESEARCHFOCUSTODAYSEVENTS0104

1、the flying pleasechina dev, text colour to korea 2013 economic outlook-04 january 2013abcglobal researchfirst light asiaproduction:dutchman, changeshippingheadlineindia pharmaceuticals,white, change headline row height to 1pt exactly before publishwhats changed, research focus, todays eventstickerco

2、mpanyratingwascurrencytargetwaseps 12eeps 13epriceprice at closeupmct spmapletree commercial trustnuwsgd0(a)5.601.2202 jandown 1138 hkchina shipping devuw(v)ow(v)hkd4.204.70-0.10(cny) -0.04(cny) 4.9903 jan2319 hkmengniu dairyuw(v)hkd19.4019.700.800.8622.3502 jansource: bloomberg, hsbc est

3、imatesclick on title to open reportsresearch focusthe flying dutchman - our 2013 views on asia in a nutshellherald van der linde* we anticipate asia equities will deliver a 15-20% potential return in 2013 we expect these returns to be driven by an estimated 10-12% earnings growth and a modest rerati

4、ng of equities focus on value: china, korea, consumer discretionary, techchina shipping dev (1138 hk) - downgrade to uw(v): reality check to end hope tradeshishir singh*stock rebounds 76% off multi-year lows on stabilised consensus estimates, one-off gains and equity market rally but, dry bulk remai

5、ns grim and will be hit again in 2013 downgrade to uw(v) from ow(v) and cut tp to hkd4.20 from hkd4.70; consensus eps to slide again after febindia pharmaceuticals - 2013: year after patent cliffgirish bakhru*after a blockbuster 2012, 2013 projected to be a year of fewer us patent expiriesindian gen

6、erics aim to compensate from growth led by india, row, and limited competition products in us2013 to see further step up in r&d and acquisitions; we expect more stable earnings for companies with lower us exposurekorea 2013 economic outlook - five key questionsronald mankorea remains on track to

7、 a gradual export-led recovery; we expect gdp to grow 3.8% in 2013, which is above consensus price pressures are expected to return around mid-year and impose an upward bias on the bank of koreas policy rate a new president, falling property prices, fta talks and more will keep korean watchers on th

8、eir toes throughout the yeartickereventratingtargetpricetickereventni bbgn/amosaicminutes of fomc meetingchange in private payrollschange in nonfarm payrollsunemployment ratefactory ordersism non-manf. compositemos usususususususq2-decdecdecnovdec55.6-source: bloomberg, hsbc estimatessunayana daga*r

9、esearch marketing+852 2822 .hk*employed by a non-us affiliate of hsbc securities (usa) inc, and is not registered/qualified pursuant to finra regulationsissuer of report: the hongkong and shanghai banking corporation limitedview hsbc global research at: http:/disclaimer & disclosuresthis report

10、must be read with the disclosures in the disclosure appendix, and the disclaimer, which forms part of itdisclosures for companies can be accessed via the hyperlinks to the original published research, which can befound in the titlefirst light asia04 january 2013regionala little better each time - wh

11、at the latest pmis mean for asiaabcfrederic neumann the world industrial cycle steadily improved through december china and the us are leading the way, but smaller economies like korea and taiwan are bouncing back, too alas, europe and japan are still heading the other way. this means that trade is

12、lagging the general pick-up in activitychina & hong kongmengniu dairy (2319 hk) - uw(v): margin risk in the new five-year planchristopher k leung* while the new five-year plan could improve sales network coverage and supply chain management, we believe it is a timelyand costly process distributi

13、on channel reform requires additional spending, and lessons from yili suggest margin downside risk maintain underweight (v) rating and lower our target price to hkd19.40 (from hkd19.70) to reflect earnings changes andeps rolloverkoreakorea auto - tougher domestic market drives greater pricing risk s

14、trong krw continues to favour pricing on imports from both us and japan hmc cutting msrp on 5 high-end models in korea in order to win back lost market share in this regard, the previously highlighted pricing risk for hmc seems inevitable, in our viewcoway (021240 ks) - ow: margins set to improve in

15、 2013paul choi*karen choi* with mbk partners now the new owner of coway, its corporate governance risk will diminish significantly although we expect q12 earnings to miss, we believe investors should focus on margin improvement in 2013e reiterate ow with unchanged tp of krw50,000taiwanradiant opto-e

16、lectronics (6176 tt) - ow(v): buy on near-term weaknessaseanmapletree commercial trust (mct sp) - upgrade to n: announces maiden acquisitionindiaindia oil & gas - latest report on gas pricing is positive for the sectordr. reddys lab. (drrd in) - ow: propecia launched in us, what next?jerry tsai*

17、david choo*kumar manish*girish bakhru*globaldislocation barometer for luxury, sporting goods and spirits - analysis of 2012 share performance vsearnings revisionsprecious metals - lowering 2013 gold forecast, introducing 2015 forecastsmarket dataantoine belge*james steelmarketshsbclast5d %forecast g

18、dp (%yr) int rate usd vs ccyhsbclast5d %commoditieshsbclast5d %hsi24,00023,3993.80us1.70-0.25 eur1.351.31-0.95oil90.093.12.45shcomptaiexkospi2,5008,3002,3002,2697,8372,0195.102.621.90chinataiw ankorea6.002.3753.25cnytwdkrw6.1828.61,030.06.2329.0010620.070.130.99goldcoal (thermal)steel (hrc

19、asia)1,85090711167591n/a0.900.06n/atopix7808602.53japan0.20-0.10 jpy74.087.0-1.07aluminium2,15020942.85bse 3021,70019,7652.28india5.77.50inr50.054.490.82copper7,50080854.07source: bloombergeconomics03 january 2013a little better each timewhat the latest pmis mean for asiathe world industrial cycle s

20、teadily improved through december. china and the us are leading the way, but smallereconomies like korea and taiwan are bouncing back, too. alas, europe and japan are still heading the other way. thismeans that trade is lagging the general pick-up in activity. local demand in china and the us are th

21、e main pillars ofdemand currently. thats good for now, but, ultimately, its not good enough for the world economy to break out of itsfunk. things are lukewarm at the moment and for the temperature to rise, the world needs europe and japan to turn,too.take a look at our first heatmap. the colors are

22、starting to diverge. in the us and the uk, along with much of emergingasia, the shades are now leaning towards red. granted, in some cases, including the global pmi, the readings are barelyabove break-even level. still, this is progress. our first chart shows that new orders have risen further relat

23、ive to inventories,warranting a further pick-up in production in emerging asia in the coming months. in japan and the eurozone, however, theslump has deepened. there is some hope that over the course of this year, these economies will at least stabilize; but, its aprecarious situation in both cases.

24、new orders mirror the trend. in china and india, hsbcs measures revealed a strong rise. in korea and taiwan, new orders atlast rose above 50. the us, too, held its ground, with the markit reading rising especially strongly. but, take a look at japan:new orders tumbled to 40.7 from 45 in november, a

25、level not seen since the tsunami struck the countrys coast in 2011. in theeurozone, too, including in the twin engines of france and germany, new orders tumbled further last month.our second heatmap shows new export orders. these still lag the improvement in new orders. in fact, both measures for ch

26、inafell last month, with koreas plunging, too (taiwan saw a nice pick-up, but the vagaries of the tech cycle mean that this seriescan at times be misleading). only india (no export power-house) and the us showed a convincing rise in new export orders.amid all the encouragement from the latest bounce

27、 in global pmis, discouraging new export orders is a reminder that theglobal economy still faces severe headwinds going into 2013 (see chart 2 for the divergence of new orders and new exportorders).local demand, therefore, is the main driver of growth at the moment, whether in asia or in the united

28、states. in the latter,the mini-deal over the fiscal cliff removes some, though certainly not all, uncertainty (the real hurdles, arguably, will haveto be taken before march). encouragingly, for the most part, employment is holding up. in china, both pmis showed someimprovement, with korean and taiwa

29、nese firms adding jobs as well last month, and even in japan things were not quite as badlast month).a stand-out is indonesia, where the employment component fell again in december, stuck below 50 for the second month in arow. this, however, may reflect more local uncertainties surrounding wage sett

30、lements than an outright buckling in businessconfidence. for emerging asia more generally, the improvement in labour market conditions suggests that retail sales - hugelyvolatile of late - should hold up nicely (chart 3). in short, itll take some time before trade roars back. for the moment, asiangr

31、owth is more of a local affair.frederic neumann | +85228224556 | fredericneumannhsbc.com.hkview hsbc global research at:http:/issuer of report: the hongkong and shanghai bankingcorporation limitedhsbc global researcheconomics03 january 2013frederic neumannco-head of asian economics researchheatmap 1

32、: headline pmis and new orders (source: markit, ceic, hsbc)2hsbc global researcheconomics03 january 2013heatmap 2: new export orders and employment (source: markit, ceic, hsbc)chart 1: asia ex japan: new orders minus inventories and ip growth3hsbc global researcheconomics03 january 2013chart 2: asia

33、 ex japan: new orders minus new export orderschart 3: asia ex japan: pmi employment and real retail sales growth4equity strategyasia pacificthe flying dutchmanour 2013 views on asia in a nutshellabcglobal research we anticipate asia equities will delivera 15-20% potential return in 2013 we expect th

34、ese returns to be driven byan estimated 10-12% earnings growthand a modest rerating of equitiesmarkethsbcweightingend-2013 sectorindex targethsbcweighting focus on value: china, korea,chinakoreaoverweightoverweight702,300it overweightcons discretionary overweightconsumer discretionary, techindonesia

35、taiwanindiasingaporemalaysiahong kongthailandoverweightneutralneutralneutralneutralunderweightunderweight5,0008,30021,7003,4701,83024,0001,475energyfinancialsindustrialsutilitieshealthcarematerialstelecomsoverweightneutralneutralneutralneutralunderweightunderweightequities can perform in a weak grow

36、th environment.against a backdrop of low valuations and rising expectationsfor an economic growth recovery, we estimate asian equitieswill deliver a 15-20% potential return in 2013. this willphilippines underweight6,240 consumer staples underweightlikely be driven by 10-12% earnings growth across th

37、e regionsource: hsbc4 january 2013herald van der linde*head of equity strategy, asia pacificthe hongkong and shanghai banking corporation limitedin the coming year, along with a rerating of 4-55% in shareprices and an average dividend yield of 4%.earnings visibility improving. consensus earningsesti

38、mates have stabilised for now, and it increasingly looksas if they have bottomed.value versus growth. there is still uncertainty regardingglobal growth. thus, its not just about positioning for cyclicalgrowth, but also for a lower risk premium. this is why webelieve investors should construct portfo

39、lios with a bias tovalue instead of growth.stock-picking themes. aside from preferring value to growth,our key themes are companies that (1) can grow as theirmarkets consolidate, (2) have margin power and effectivecost controls, and (3) enjoy structural growth.+852 2996 .hkmarket and sector calls. w

40、e overweight key value marketsdevendra joshi*equity strategist, asia pacificthe hongkong and shanghai banking corporation limited+852 2996 6592 .hkview hsbc global research at: http:/*employed by a non-us affiliate of hsbc securities (usa) inc,and is not registered/qualified pursuant to finra regula

41、tionsissuer of report: the hongkong and shanghai bankingcorporation limiteddisclaimer & disclosuresthis report must be read with thedisclosures and the analystcertifications in the disclosureappendix, and with the disclaimer,which forms part of itand sectors, such as china, korea, and consumer d

42、iscretionary.we also like markets and sectors that are under-owned, suchas technology and, to a lesser extent, indonesia.risks. events in europe and global growth remain key risks.we also think possible monetary policy shifts in japan are arisk, especially after the liberal democratic partys recentw

43、in in the countrys general elections.40302010equity strategyasia pacific4 january 20132013 views in a nutshell we expect a 15-20% potential return from asia equities in 2013 asia is likely to see 10-12% earnings growth, with a modest re-rating of equities driving these returns look for value: china,

44、 korea, consumer discretionary, techabcmuch the sameequities in a subdued growthenvironmentagainst a subdued growth environment, the asianequity markets were able to eke out double-digitreturns in 2012. we think the story will be similarin 2013.we expect asian earnings to grow 10-12% in2013, a littl

45、e higher than in 2012 (for which wenow estimate 8.6% growth) and not far off thecurrent consensus estimate of 13.6%.compared with 12 months ago, a marked differenceis that some issues are now much clearer. part ofthe credit for this decline in risk goes to the centralbanks in europe and the us, whic

46、h have removedthe major tail risks from equities by rolling outvarious easing policies. japan could join the clubif it changes its monetary stance in april.regionally, the fog surrounding asian earningsforecasts is slowly clearing. china pmi readingssuggest that the economy is slowly recovering, sor

47、isks to corporate earnings in china are also onthe decline. some serious risks remain; we havepreviously written about the low quality ofchinese earnings and onshore cash flow issues.2however, consensus 2012 estimates have declinedto levels where we believe analysts might havebecome too conservative

48、.as a result, earnings estimates have, for now,stabilised. when it comes to earnings estimates, itincreasingly looks as if they have reached a bottom.earnings momentum chart0-10 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12-20-306 mth 3 mth-40source: msci, thomson reuters datastream, hsbc

49、this is illustrated in the chart for three- and six-month earnings momentum. analysts have not cutnumbers for some months now and, as visibilityhas improved, the premium for visibility hasdeclined. market volatility has already declined inrecent months.feb-12mar-12jan-12jun-12aug-12sep-12oct-12apr-1

50、2jul-12may-12nov-12equity strategyasia pacific4 january 2013value versus growthwe think it is too early to call for a cyclical recovery.global deleveraging implies continued below-trendgrowth in most parts of the west, while chinasrebalancing suggests emerging asias growth islikely to involve a lowe

51、r growth trajectory.thus, when looking at asian equities, we thinkthe best strategy is not to position for cyclicalgrowth, but to make the most of a necessarilylower risk premium. this is why we believeinvestors should avoid constructing portfoliosaround defensives versus cyclicals and insteadthink

52、in terms of value versus growth.while value is defined as stocks trading at lowmultiples, growth is a term adopted during thetech bubble in the late 1990s, when fast-growingsingapore and reallocated to markets such astaiwan. a similar move from consumer staplesinto consumer discretionary is taking p

53、lace.the chart below illustrates that part of this shift isalready in place. investors have scaled back theirweights in the philippines, a growth market, andrecently added to taiwan.mutual fund positions (versus benchmark) (countries)philippineindiahongkongsingaporethailandkoreachinamalay siaindones

54、iataiw anabcnew economy stocks traded at high multiples.-4.0-2.00.02.04.0in asia, however, stocks that have traded at highmultiples are not necessarily those that haveoffered the highest growth, but those that couldprovide earnings visibility and reliability. valueversus visibility would thus have b

55、een a moreappropriate way to characterise the right approach.in 2012, asia growth outperformed asia valuenote: red dot shows current fund weight with respect to the neutral benchmark, blackdot shows the same 3 months ago and gray bar represents the 5-year range. data asof october 2012source: epfr, h

56、sbcsector-wise, consumer discretionary has seensome modest inflows. interestingly, our analysisof fund holdings also suggests that portfolioweights in technology are at a five-year low.this, we argue, is a positive for that sector.1201151.021.01mutual funds positions across the region (sectors)11010

57、51009590msci aejmsci value/grow th-rhs1.000.990.980.970.960.95healthtelecomsutilitiesmaterialsindustrialfinancialscstaplescdiscritenergynote: indices rebased to 100 at 1 jan 2012.source: msci, hsbc-4.0-2.00.02.04.06.08.0this shift in markets from growth to value hasalready started. our analysis of m

58、utual fundnote: note: red dot shows current fund weight with respect to the neutral benchmark,black dot shows the same 3 months ago and gray bar represents the 5-year range.data as of october 2012source: epfr, hsbcpositioning across asia also suggests that moneyis being taken from stable markets suc

59、h as3jan-06jan-07 jan-08jan-09 jan-10jan-11 jan-0.20.0equity strategyasia pacific4 january 2013value searchthe most obvious value market in asia is china.valuations remain attractive, especially against ankorea valuation chart consumer versus techmsci korea fw d pe cstaples/techa

60、v g cstaples/techabcimproving macroeconomic background.1.0a second value market in asia is korea, where aneconomic recovery depends on rising exports tochina. here, too, domestic sentiment is poor.household debt is high, and consumer confidenceremains low. sales momentum for the largedomestic department stores has we