SHOWS: HONG KONG, CHINA (JANUARY 7, 2012) (REUTERS - ACCESS ALL)

JING ULRICH, MD & CHAIRMAN OF GLOBAL MARKETS, J.P.MORGAN

1. REPORTER OFF CAMERA SAYING:

'Will you be investing in China now with monetary policy change given the economic growth we are seeing right now?'

2. JING ULRICH SAYING:

'Well the Chinese economy is on a path to recovery. We had a fairly challenging first 3 quarters of 2012. But starting the last couple of months, we're seeing some recovery. Industrial figures are becoming more positive. The housing market is also rebounding. Retail sentiment is also improving. I think in 2013 the best places for investors to invest in China basically are in the service industry and consumer-related sectors.'

3. REPORTER OFF CAMERA SAYING:

'The smartphone sector is a hot market among middle-class mainlanders. How do you think demand for smartphones will look like for 2013?'

4. JING ULRICH SAYING:

'Well smartphones demand in China is very, very strong. Of course the market is growing very rapidly. I would say China will become the biggest market for smartphones in the future. Gadgets among young people in China are particularly popular. Some of them actually treat smartphones not just as functional, but also it's a status symbol. So some of the global brands are extremely popular in China. This is in keeping with the rapid growth and the spending power of Chinese consumers, especially among young people.'

5. REPORTER OFF CAMERA SAYING:

'If we were to invest in Chinese stocks, would you prefer the A-shares or the H-shares?'

6. JING ULRICH SAYING:

'Well the Hong Kong market did very well in the recent months, basically outperforming the Chinese domestic A-share market. And that trend began to reverse itself sometime in the latter trading days of December as A-share markets quickly picked up. So basically we're seeing a sentiment shift towards the Chinese domestic A-share market. At this point, domestic A-shares and Hong Kong-listed H-shares are roughly trading at parity. I would say given the underperformance of the Chinese domestic market in the recent years, in 2013 we have to see some kind of catch up because you're seeing the Chinese A-share market beginning to revive. We're seeing a 3-year bear market beginning to change course. The Chinese leadership introducing a lot of policies to rebuild investor confidence and foreign investors now have a big interest in the Chinese A-share market as well.'

7. REPORTER OFF CAMERA SAYING:

'Let's talk about the Chinese policy compared to policies in Europe & in the U.S.. How is the landscape going to look among policymakers in 2013? And how does that affect global sentiment?'

8. JING ULRICH SAYING:

'It is still going to be a challenging year for policymakers everywhere. But the challenges facing the different leaderships will be very different. You have the Chinese leadership now inheriting an economy that's now the second-largest in the world, the Chinese government has a very strong fiscal position. It is going to increase spending and cutting taxes, which is very different from Europe and the U.S. where you are facing already a very large deficit. So they're going to increase taxes and cut spending. So by definition, the Chinese economy will grow faster compared to the developed economies. We're forecasting 8% growth for China in 2013 which is an increase compared to 7.6% in 2012. So I would say given the long underperformance of Chinese A-shares in the recent years, in 2013 we should begin to see some kind of outperformance.'