Contents

2H09 market strategy 4
Better-than-bad isn’t enough 4
More resilient economy due to consumption strength 5
Policy will remain pro-growth 7
Valuation is not expansive 9
Interim results and earnings recovery in 2H09 10
M&A the long-term driver 12
Sector rotation: domestic growth and defensive plays 14
Adjusting index targets and
model portfolio 16
Index target revision 16
Model portfolio adjustment 17
Risks 18
Risk aversion to rise again? 18
Appendix 19
A and H share discount stock screen (57 companies) 20
Valuation Data Pack 21
HSBC China coverage list (157 companies) 22
Economic Calendar of 3Q09 25
Disclosure appendix 28
Disclaimer 31