July 26, 2010 (Chinavestor) Goldman Sachs (NYSE:GS) said it remains "fundamentally positive" on China's Yuan-denomiated A shares despite a recent surge by the CSI 300 Index, citing fair valuations and other catalysts. The U.S.-based bank cited Chinese insurers as a way for investors to gain exposure to the A shares market.
Goldman (NYSE:GS) noted that while it does not expect Chinese monetary policy to ease in the near term, any news the market deems good on this front could be a positive catalyst. The CSI 300, tracking yuan-denominated shares on the Shanghai and Shenzhen exchanges, has surged 12% since this year’s low set on July 5, on speculation cooling economic growth and property-price gains will spur the government to ease its policy tightening, according to Bloomberg News.
Despite the recent bullish ways, Chinese stocks are still the worst performers in Asia this year. Goldman (NYSE:GS) says China's A shares currently trade 13 times estimated profits. The bank expects EPS growth of 29% this year and 22% in 2011.
Goldman named China Life Insurance (NYSE:LFC), China's largest insurance firm, and China Pacific Insurance (2601:HK) as preferred choices for investors considering A shares names.