Bullish Outlook On Chinese Equities, Watch For Inflation

Merrill Lynch recommended being long on Chinese equities like China Life Insurance Company Ltd. (ADR) (NYSE: LFC)(FREE stock trend analysis) in 2010 but cautioned that the inflation could surprise on the upside.

It has noted that, with the global growth recovering, it expects to see markets rise, for example, with companies like China Life Insurance Company. Merrill Lynch believes that the policy-makers have fought a debt problem with more debt, moral hazard issues have been created and the credibility of the central bankers remains an issue.