To be sure, high value stocks, including those in the financial sector, still have their following among fund management companies.

But UBS, the largest QFII investor in the market, said it would focus on stocks with low price-to-earnings (P/E) ratios in the coming year instead of high-priced equities.

"We will increase our holdings of lower-priced, high-growth-potential stocks after selling parts our of high P/E ratio stocks," said Yuan Shuqin, head of China equities at UBS.

UBS is approved to invest US$800 million in the Chinese stock market, the largest quota approved by the China Securities Regulatory Commission.

In 2006, prices of many listed companies in the banking and food and beverages sectors greatly increased while the gains in the transportation sector have remained modest, according to Yuan.

P/E ratio of some stocks in the financial sector, like the Industrial and Commercial Bank of China and Bank of China, are over 45, much higher than the same stock in the Hong Kong market, where it has a ratio of about 30.

"The P/E ratio in the A-share market is relatively high compared with market fundamentals," said Qu Hongbin, chief economist of China at HSBC. "It is time to shift the focus from the high-priced financial sector to the consumer sector."

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