In travel-related sectors, we expect acceleration in growth partly on the very recent introduction of policy stimulus. On Nov 25 2009, the State Council issued its policy guideline to accelerate the development of the tourism industry. Under this guideline, the government will lower entry barriers to private and foreign capital, increase investment on tourism infrastructure, and speed up the restructuring of state-owned travel companies. More implementation details should follow in the coming months. Specific measures may include further relaxation of visa restrictions (especially between the Mainland and Hong Kong/Macau), more duty-free shops, subsidies for ticket prices at tourist attractions, free tourism coupons, incentive travel as part of SOEs' employee benefits.

Healthcare spending should also accelerate growth in 2010 due to the earlier delay in reforms. The Notice on Reform of the Pricing System of Drugs and Medical Services, issued by the NDRC on Nov 23 2009, finally sets the stage for changes to the hospital procurement system (which should favor medical equipment over drugs), distribution channels (likely to accelerate consolidation of drug distributors), and expansion in health insurance coverage.

Insurance premium growth dropped to a single-digit level in 2009, down from 39% in 2008. Key factors behind this deceleration include the decline in households' investment confidence and the industry-wide reform, which shifts the focus from bancassurance products to longer duration regular premium individual products. In 2010, with the new insurance law now in effect and rising interest rates providing life insurers with better pricing ability, insurance premium growth will likely reaccelerate to around 15%.

Eoin Treacy's view If one were to have one word that could be used to describe how the Chinese economy works, I think 'security' would have to be a major contender. The Communist party is concerned with how secure its rule is. Their solution is to ensure that the living standards of the vast majority continue to improve. Economic growth and rising property prices have both helped to secure this result. Individuals feel forced to save a relatively high proportion of their income because of the social uncertainty resulting from the twin lacks of a social security net and adequate medical cover.

A more consumption, as opposed savings, driven population is a key element in China's drive towards a modern, well diversified economy. The need to save such a high proportion of one's income to allow for unforeseen events is an obstacle to this ambition. However, it is becoming clear, through legislative developments that the authorities are serious about tackling the lack of affordable healthcare. The further development of the insurance sector is an important theme moving in tandem with wider healthcare availability.

The Atlantis China Healthcare Fund remains in a consistent uptrend. It bottomed in March last year and has posted a progression of higher reaction lows and a series of relatively similar ranges, one above another since. A sustained move below 0.88 would now be required to question scope for further higher to lateral ranging.

China Vanke is China's largest insurer. The share found support in the region of ¥5 in September 2008 and subsequently encountered resistance near ¥15. The price has been ranging mostly above ¥10 since September 2009 but is presently retesting that level. An upward dynamic and/or sustained move above ¥11 is required to indicate that demand is regaining the upper hand.