Mainland stocks still look attractive

The mainland's A shares are still among the most attractive in Asia-Pacific even after a strong rebound over the past three months, given their low valuations and big re-rating potential following key political conferences next month, according to Allianz Global Investors.

The Shanghai Composite Index is trading at around 12 times price to forward earnings and AllianzGI expects the valuation of the onshore benchmark to bounce back to around 14 to 15 times.

The benchmark had its biggest decline in a month on Tuesday on speculation that the government could announce new measures to curb the property market. The gauge finished 0.6 per cent higher at 2,397.18 points yesterday.

Corporate earnings were expected to provide a boost to share prices, but whether the market would bring sweet surprises to investors this year would depend on whether Beijing would announce key reforms next month that would trigger a re-rating wave for the stocks, said Raymond Chan, AllianzGI's chief investment officer for Asia-Pacific.

"There could be some key reforms in interest rate liberalisation, the bond market and the tax system following the key political meetings in March," Chan said. "Those reforms would benefit the financial institutions most."

He expects earnings at mainland-listed firms to have low double-digit growth this year.