3January2022EquityResearchCREDITSUISSEAsiaPacific|ChinaChina Market StrategyOutlook 2022: A better year when the dustsettlesStrateay|StrategySuportrendslFiaure 1t:New sector weighting of CSChina model portiolieResearchAnalystsEdmondHuang85221016701edmond.huang@credit-suisse.comContributinganalystKennethFongCharesZhouBinWangSourcer Refiritiy,CreditSuisseestimatesKynaWongMacro economysetto bottomout.Folowinga V-shaped recovery in 2020, China'sYangHuanggrowth lost momunexpectedstill tough1H22.enditure,carryoutaconstructiveJianpingChenonetarypolicy and adjust the implenrChina'slong-termdevelopmentHuShengoalssuch as common prosperity andGaryZhouAccordlingtotheCSCOiteam'sChadlienTsengindusthasmananersconfrmed the moderate easing;mandaoutok andepect thehighpowertaifstsLok Kan Chanmanufacturers are cautious about the year while serviceJasmineWangSixteeccordingly, which sendsrankZhengmarketissetto recover, given positivecelyn Zhangeap valuation, despiteanea-term slowingVeronicaSongMSCIChina/HS/CSI300are91/26,200/5,760.htinue to expect multi-year secular themes to play outinapproachin sector selection, given lack of dlear drectionop5 sector-relative weightings are industrials (+4.2%),IMaxyYingI materals(+1.5%>), cities (+1.09%) and energy (+0.8%), versus biveights in consumer discretionary(-3.2%), communication services(-2.9%)and financial-2.8%). We had the largest increases in real estate (+3.09%), healthcare (+2.6%), andEAPPENDIXATTHEBACKANTDISCLOSURES.ANALYSTCERTIFICATIONSENTITYDISCLOSUREANDTHESTATUSOFNON-USAIUS Disclosure:Credit Suisse does and seeksto do businesswith companies covered in ts research reports. As a result, investors should be aware that the Frm may have a conflict of interest that coukaffect the obiectivity of this report. Investors should consider this report as only a sinale factorin making their investment decision
CRedntsuisse"3January2022Focus chartsFigure 3: China has a higher degree of tolerance towards macro11M202130%YoY驼2公场22.0%2-year.CAGR-5%11M201711M201811M201911M2021T1M2021-TSFyoy(RHS)Source:NBS,CreditSuisseestimnates,Source:BS,PBoC,CreditSuisseestimatesFigure4:RRR-large vs small and medium financial institutionsFigure 5: Performance of NASDAQ100&ChiNext Inder88888888Nasdaq100-NASDAIGdsenDraganChinaIndeSauce.Wind, PBoC,CGeldit SussestimatesNaterRebased toQ3-Jan-2020, dlaupatedto17-Dec-202Source:theBLOOMBERGPROFESSIONALTMserviceFigure6:Numberofmonthspostinggains/Figure 7:2021YTD revision of2021EEPS and 2022EEPSMSCICNCSI3000.1%0%-3.3%007875白-10.912.5%-15%-18.59;17.5%2021EPS2022EPSNate:Hit rate calculated as the number of sectors postingmore than 6manths ofNate:Dataasof17-Dec-2021gains didedby thenumberodftalsectors,Source:Refiritiy,CreditSuisseSource:Refiritiv,CreditSuisseChinaMarketStrategy
CRedntsuisse"3January2022A better year when the dust setles,Macro economy set to bottom outChina'seconomy hasexhibited an uneven nomalisation path from the pandermic. Flowing aoderaterecovery in 2H22,afterastilltough1H22V-shape ecorey 2020, China gowlt bs momanium ine 021 de o resurging 0viD,summe odin,urepeded power as andu...
