China Strategy:Small step for HK,large step for SZ

The merger of Shenzhen and Hong Kong - one of our long-term projections (20Years in Asia) – is being brought a small step closer with the launch of theShenzhen-Hong Kong Connect on 5 December. The launch signifies an easingof capital outflow concerns and provides international investors access toChina’s most dynamic equity market. Access to A-share private enterprises willjump by 4x. Hong Kong small caps are being included for the first time. Weforecast a further 15-30% upside for China equities. Our top Hong Kong smallcappicks and Shenzhen A-share picks are highlighted in this report.