GUANGZHOU (Fund China) – Yesterday, the statement from the AXA SPDB Investment Managers Co., Ltd. for 2008 invest strategy shows a rising prediction for the stock market in 2008.

The over valuation would be diffcult to boost the bullish market to continue if a un-rational bullish in midyear next year, the stock market will completely turn down at the end. And the investors’ fear may be aggravated by the slump, thus the slump may be more sharp and may broaden more widely. But totoally, the A share market will show itself in 4 trends next year.

Raise with risk upgrade

The total stock market will keep on moving up 2008 when refering to the economic growth, the excess liquidity, the saving capital transition and the performance of the published corporation. The A share rising period and peak point depends on the valuation level and the market rising speed. There would appear a un-rational flood at the end of the bullish market in view of the overheating atmosphere in the bullish market.

The enhancing valuation in A share lead to a unprecedented high level of the PB(Price per Book Value) in the market. Only the dynamic Price/Earnings Ratio is acceptable. The more rising in the stcok market, the greater accumulated risk it will be. The A share market would not be a lonely leading climber next year and the annual peak point may not be sure to appear at the end of 2008. Thus, the stock market would totally turn round in the end if a un-rational bullish appear in the midyear 2008.The over valuation can not support the bullish market to continue. Moreover, once the market turns down, the fear of investors will enlarge the slump.

Fluctuation frequency quicken and the scope broaden

The stock market adjustment and congestion margin are small but the pace moved rapidly each time since the early days of this year to the end of Oct.

The stock indeics tumble more than 10% within several trading days. The investors become more frailish as the market rising since a more than two years’ bullish stock market from 2005. the market will be easier to shock and the adjustment range will be wider under a high valuation. The factors may lead to congestion are as followed: the 2008 Olymipc Games, the promotion of the stock index futures, the emerge of innovative undertaking board, the fluctuation of the global economy and the stock market, the H share market, the spread of the QDII scale, the slowdown in the export surplus, the strict administration management in the stock market and the macroeconomy, etc..

Copyright Fund China 2009.

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