Investment Watch: Does the index overreact to economic recovery?

Zengyongjin, director of the Research Division of Group Yi Securities (Hong Kong), if, according to Bloomberg Statistics and calculations, the Hang Seng index is at 17,153 points, 　　Equivalent to 15.4 times times the earnings of 09 index-stock companies, and based on corporate earnings in 2010, the current level is about 13.24 times times, meaning that the average market expectation index component shares will show a year-on-year growth of 16.3% in 2010. Can the company's earnings return to 16.3% year-on-year growth in 2010? Of course, this data is not a single calculation of core profitability, but contains the value of the investment site revaluation and one-time income part (to measure the actual profitability of the enterprise, when the core earnings performance). Although the main business is rooted in China's Chinese enterprises accounted for more than half of the market value of the index, but in accordance with the contribution of the composition of the industry to estimate the profits, especially the Chinese banks in the face of the rising risk of corporate loans, the core earnings of the HSI can record a growth rate of 16.3%, Reflects that the current valuations of the index are too reflective of the economic recovery. 　　It is expected that the valuation would be raised to 18,000 levels. At this stage, China's deflationary pressures and risks are on the rise, and in April the consumer price and the production price index have a larger year-on-year decline, the current situation will gradually affect the confidence of the general public, and then create a vicious circle, so that deflationary pressure to deteriorate, is the key. Therefore, it is expected that the government will further introduce stimulus measures to further strengthen confidence in various areas, under which it is estimated that the Hang Seng will be supported in the area of 16,200 to 16,000 in the short term.