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Optimistic on the Chinese market: Tyche Group

2008-05-14 09:16:14 Source : Power Breakfast/CNBC-TV18
(Interview Transcript)

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There was a devastating earthquake yesterday in China and so the Chinese market is bleeding right now. Some of the Asian markets have recovered after a flat start. On answering a query about , Senior Manager at told CNBC-TV18, we are generally very positive and optimistic about the Chinese market; especially the Hong Kong related China stocks in our view are attractive with the valued so low. He further adds that the Chinese government is capable of resolving the earthquake problem.

Excerpts from CNBC-TV18's exclusive interview with Martin Hennecke:

Q: With regards to China do you think it�s just a knee jerk reaction and the market would stabilize soon after may be tomorrow or day after?

A: Yes, we think so. We still like China and last time when China had a major snow storm due to which some areas in China were completely frozen, all the power lines, buildings and traffic were affected very badly the Chinese Government handled that situation very well. They had the military helping out and now this time also the Government has again sent for the military to resolve this situation.

We are generally very positive and optimistic about the Chinese market; especially Hong Kong related China stocks in our view are attractive with the Renminbi valued so low. We would not recommend investors to panic or move out but just to remain in that market for those who are and for those who are not to move into. We expect that this earthquake situation will be resolved.

Q: But how do you take into consideration the China�s consumer price inflation numbers, which have stayed near 12-year highs?

A: We had this inflation numbers out over the holidays and it is at 11-year high. We had 8.5% in April for the consumer�s prices and that indeed is something to watch because people who like to gain exposure to the Renminbi as that is the currency that is the most undervalued and has the most appreciating potential.

Now the problem for the investors is that the inflation is much higher than the interest one gets on bank deposits. So this inflation is why we recommend for China exposure to actually go for equities.

Q: A quick word on the rest of the Asian pack, which seems to be doing quite okay this morning?

A: Yes, generally our view remains that the big financial crisis that is getting worse in the US, is the US and the European financial crisis and the Asian consumer markets are still under estimated by global investors and we like the Asian markets, although we always say hedge your position with gold as a financial crisis protection.