GUANGZHOU (Fund China) - Wangguowei, the chief investment officer of Hua’an fund management makes a colorful address in the 2008 investment strategy report.

Addressed by Wangguowei: the most improtant thing for you to be here, I think is how to speculate in 2008. I would like to show you some information first, the A-share PE( private equity) in the shanghai and shengzhen stock markets is still in a high level even after a adjustment at the present salary, it is nearly duplicated to some stock markets.

And in another side, the price gap between the A share and H share is still quite wide, maintaining in a relatively high level in the history. Sometimes the H share are moe expensive than the A share, but it is very seldom. Total speaking, the H share is cheaper than A share. Some investors may worry we are repeating the 2001’s disaster. But I don’t think so.

Because there are many difference. First, the economic environment is different, in 2001, we suffered from the Asia financial storm, but now the most important is slowdown the economy growth. Second, the attitude Government held is not the same. In 2001, we worried about an short-term supply overload during the bearish market but now our government think further of the stock market. Third, the profit increase is different, the managements and institutions are optimistic to the corporation profit growth in 2006 and 2007 in accordance with the current available data.

Maybe you will ask why our published corporations can not gain a profit under such a preferable macro-economy in the past years? I think the past market can not represent our gross economic development level at present. A large number of excellent companies switched to the HongKong market because of a IQ rejection from the domestic securities marekt, which we can not speculate in the A share market.the large monopoly and the state-owned corporations’ publication changed such a structure. Fifth, the domestic participartor is different, Prior to 2001,the fund took a relatively samll proportion in the invest market and did not act as a leading role, but after several years development, the securities institutions and the insurance companies appeared and taking quit a big cake. But this increase will not expand like The Effect of Sheep Flock in the short term.

We are more concerned the high valuaton will continue or not, all high valuation must have some fine fundament to support. Our prediction for the high valuation will move down in 2008 is not caused by a one-way’s fall-down, but by the listed corporation yield growth to sterilize the high investment risk in history. From the three areas, we can see that the macro-economic operation makes the new market can be maintained at a high investment level.

If it is said that the growth mode is a painful transition, then it will be benefit to the people, I think I am more concerned about, under the premise of opening to oversea, China’s macroeconomic will lead to three results: very upbeat, optimistic and prudential optimism. We basically hold a relatively optimistic attitude via a macroeconomic analysis for next year.We can see that many colleagues did some analysis of the demographic bonus, economic growth and so on, if not under the opening policy, all these advantages are of no value and role. This lesson is relatively deep in the past few decades.

Copyright Fund China 2008.

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