[I-bank focus]HK jobless rate to rise to 4.1% in 2016

    J.P. Morgan believes Hong Kong's economy is going to face challenges in 2016 with unemployment rate potentially rising from 3.5% to 4.1%.
  The expected slowdown in the China economy will continue to weight on its retail sector. While China exports are not recovering fast enough, the only hope to sustain the Hong Kong
economy is through a stable or improving financial market, said the research house.
  Morgan believes EPS downgrades will continue until the end of 2016 mainly in Macau gaming, Hong Kong property and the consumer sector. To a large extent, it believes the "cheap" valuations in the Hong Kong market are yet to reflect this potential earnings downgrade.
  Given the integration of the Hong Kong economy into China, Morgan believes the change in China's economic leading indicators such as PMI will be a major driver of sentiment in the Hong Kong market. It does not expect a crisis type of property price correction in 2016.
  Morgan is "overweight" on Hong Kong stocks, which are relatively insensitive to economic growth in China. It likes CKH (00001) because of its global diversification. AIA (01299) remains a solid insurance company with steady growth.
  It also likes Sands China (01928) as the reseasrch house believes Macau is transforming into a mass market driven market, and the expectation of a stronger economy in US should benefit exporters like Techtronics (00669). At the same time, given the potential downside risk on Hong Kong residential market, it is "underweight" Henderson Land (00012) and SHKP (00016).