International | Jun 08 2006
By Terry Hughes
HSBC equity strategists have been visiting companies in China and they have come to the conclusion that there is no sign of an economic slowdown.
Garry Evans and Steven Sun visited a diverse range of companies, 18 in total and while they see no apparent slowdown, they feel some sectors are showing signs of maturing.
This has led some companies to focus more on "second tier cities or make acquisitions to maintain momentum."
According to the strategists, consumer-related companies are reporting revenue growth at least as solid as last year, even in sectors where the government is trying to curtail growth.
Consumption related areas are also seeing high growth, with advertising spend reportedly 15% up on last year.
So what can the People’s Bank of China do about this?
The strategists suggest a shift in its FX policy would probably do the trick, but with a large scale nationwide political reshuffle due next year, they see this as unlikely over the short term as local governments push to show off their economic achievements.
