Nomura said Chinese stocks’ most immediate headwind – the year-long credit stranglehold that fuelled fears of a “hard landing” and mass business failures – is easing, as December’s eight-month-high new bank credit (of RMB640bn) made clear. Further monetary relief lies ahead. The research house expects a “soft patch” for Chinese demand in the first half of 2012, owing chiefly to a pause in housing construction. But Nomura noted this was priced-in by H-shares’ 21% 2H 2011 decline. It said investors can capture a further substantial portion of the still-large discount on H-share stocks. The house’s preferred allocation primarily emphasizes “value beta” in China sectors such as Financials, Energy, Materials and Industrials. Following is the focus list of the research house:

Name (stock code)                     Industry           Rating
—————————————————–
CITIC Bank (00998)              Banks              Buy
Shanghai Electric (02727)        Capital Goods      Buy
Daphne (00210)                    Consumer Durables  Buy
Petrochina (00857)                Energy             NR
Ping An (02318)                   Insurance          Buy
Jiangxi Copper (00358)            Materials          NR
Longfor Properties (00960)        Real Estate        Buy
Cosco Pacific (01199)             Transportation     Buy