Stocks to bottom in 2011: JPMorgan JV
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China's stock market, pushed lower by Beijing's monetary tightening moves, may retreat further, but investment opportunities will emerge when the economy stabilizes next year, JPMorgan Chase Chinese fund joint venture said Tuesday.
Stocks that stand to benefit from government support for domestic consumption and innovation could be safe bets for now, while buying opportunities in traditional sectors such as resources would come during the first half of next year, said Luo Jianhui, fund manager at China International Fund Management.
China's benchmark Shanghai Composite Index jumped 12 percent in October, fueled by inflation expectations, but the upward trend was snapped by a flurry of tightening measures that have knocked the market down more than 11 percent from a peak hit this month.
"Over the short term, I'm cautious - this is the darkest period in terms of policy expectations," Luo, who manages 793 million yuan ($119 million) at the China International Dual Core Balanced Fund, told reporters in Shanghai.
"But I'm optimistic about next year, when the economy is likely to improve each quarter."
The higher-than-expected 4.4 percent rise in China's consumer price index in the year to October raised the specter of runaway inflation as well as fears of further tightening, effectively putting an end to October's bull run, China International Fund Management's Luo said.
"Investors are now expecting vicious, not just mild, inflation," said China International Fund's Luo.
"Market expectations have turned abruptly for the worse."
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