Source: UOB Kayhian

QDII fund managers at the event.

UOB Kayhian has put it pointedly: Overweight S-chips. Valuations are attractive. Investors' concerns over China's
economic slowdown have been overdone.

“It is time for smart money to move around,” added the stockbroker in a special report just released.

“We have upgraded S-chips from ‘market weight’ to ‘overweight’ primarily on attractive valuations.

with China domestic A-shares and H-shares, S-chips have been trading at deep discounts after a severe correction in 2H07.”

UOB Kayhian partnered leading investor relations company Financial PR to organize a Corporate Day in Shanghai last Friday (Mar 28) targeting at QDII fund managers.

The event featured nine S-chip companies that are leaders in their respective industries.

“Though they undergo cyclical growth, they have solid fundamentals and are growing rapidly. There is no doubt a few of them will eventually become respectable global enterprises.”

On a macro basis, China does face challenges such as soaring prices of commodities.

But UOB Kayhian pointed out that China has a closed financial system and strong domestic consumption, and will
be able to ride out this difficult period.

"We still believe China could
achieve 10% GDP growth and CPI growth of below 5.5%. A hard
landing and hyperinflation are unlikely to take place in China."

Full UOB Kayhian report, here.

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