UBS: Economic recovery expected in final quarter

China's economy is likely to see a slight rebound in the fourth quarter and reach 7.5 percent GDP growth in 2012, thanks to a better real estate market and the relatively proper price/earnings ratios in the stock and security markets, according to Gao Ting, managing director of UBS Securities Co Ltd.

"I don't think there will be another 4 trillion incentives issued by the government, but indicators show the micro economy of China is getting better," Gao said, referring to the 4 trillion-yuan ($635 billion) stimulus of four years ago.

"Given the inertia in the economy, I think a gradual slip of the market is possible," Gao said.

"Though the US economy might fall off the fiscal cliff at the end of this year, we think the US labor and real estate market can't get any worse."

Because of the positive fiscal policies of the Chinese government, Gao recommended investors focus on the financial industry other than on banks.

"The stocks of real estate, electricity, food and medical companies have the potential to go up as well," Gao said.

The performance of shares in the third quarter is not satisfactory, as banks, which have the lion's share in financial stocks - accounting for 58 percent of the net profit of cyclical industry in the first half - have seen a decline of profit growth, Gao said.

China Daily -Agencies