China Strategy:Breaking book

H shares are close to a key support level and can be expected to rally 20% oncethe A-share market stabilises. Margin unwinding in the A-share market isproceeding smoothly, but still has further to go. We reiterate our “Go for Growth”strategy for the Year of the Wolf. As expected, policy easing has faded as atheme and we expect renewed focus on stocks that can deliver double-digitearnings growth this year. Top picks include Fosun (656 HK, Not Rated),Wanda (3699 HK, Not Rated), PingAn (2318 HK, HK$85.65, Outperform, TP:HK$118.00, Scott Russell), Baidu (BIDU US, US$184.58, Outperform, TP:US$267.00, Wendy Huang) and Vanke (2202 HK, Not Rated).