S-Chips Risky, May De-Rate Further - JPMorgan

0034 GMT [Dow Jones] Singapore-listed China stocks, or S-chips, should be viewed with caution, says JPMorgan. Broker warns S-chips may de-rate further, not yet trading at trough level discount to China, Singapore small-mid caps. Says, "despite the deep price correction, we are not optimistic about investors' interest in the battered sector, which is vulnerable to flights to quality due to the perceived high risk profile." Broker does not see benefit even with potential revival of China QDII flows, as initial flow is expected to head towards bigger-cap names listed in Hong Kong or New York. Broker screens S-chips for potential warning bells such as lack of sufficient disclosure and high gearing; S-chips that came up as having potentially worrying qualities included Yangzijiang (BS6.SG), FerroChina (F33.SG), China Hongxing (BR9.SG), Synear (Z75.SG), Li Heng (E9A.SG). (KIG)