(Bloomberg) — Garry Evans, equity strategist at HSBC Holdings Plc, said his top equity selections in 2007 are in China, where the share prices of phone companies, banks, insurers and energy companies will continue to rise. His second pick is Hong Kong while Vietnam is his third choice. Evans was speaking at the EuroMoney-HSBC China Conference in Beijing.On Asia, focus on structural growth:

<$>“I think Asia is the best region in the world to buy right now for a reasonable amount of risk. Next year will be focused on structural growth rather than cyclical growth stories. Markets focused on cyclical factors, such as Japan, Korea and Singapore, will struggle in 2007 as a result.”

On China’s stocks:

<$>“China is my number-one pick for the next six to nine months. I expect A-share and H-share companies to have around 20 percent earnings growth next year.

“The advantage of holding both A shares and H shares is that it gives you a full range of tools in your bag. It lets you pick out what is cheaper between them, and A shares also give exposure to China’s consumption plays. Their valuations are too high at the moment, but it’s definitely a long-term theme you want to be exposed to.”

On stocks to buy in 2007:

“For 2007, I would continue holding a core of those stocks that went up this year - telecom, banking, insurance and energy. Look to utilities for real upside next year, expect 12 percent to 15 percent earnings growth.”

“The environment is going to be very big in 2007, the Chinese government is getting very serious about cleaning it up. I’d look at the hydropower sector.”

On China’s 2007 economic outlook:

“Import growth has been lower than export growth this year, and this is likely the result of import substitution. China is now making a lot more of its own capital equipment.

“Growth will slow a bit next year, and the Chinese government will probably loosen monetary policy and spend more on infrastructure in response. Look at infrastructure plays in 2007 — equipment manufacturers, power-generating equipment.”

On Hong Kong’s outlook:

“My number-two pick is Hong Kong. Its market is doing very well on strong economic performance in mainland China and on very strong liquidity.

“A lot of hedge funds have been playing the bet that there’ll be changes to the Hong Kong dollar’s peg to the US currency, but I don’t think there’s any chance whatsoever of the Hong Kong peg changing in the near future. Absolutely zero possibility.

“Hong Kong isn’t really a market that moves on valuations, it moves much more on liquidity and interest rates. I’d certainly look at interest rate-sensitive sectors, like smaller banks and property stocks in 2007, when the US Fed is expected to cut rates and Hong Kong rates will fall along with them.”

On Vietnam’s market:

“My third Asia pick would be Vietnam. Its economy has grown at about 7.5 percent to 8 percent this year, and I think it’ll continue to grow at this rate next year. There’ll be a lot of IPOs in Vietnam over the course of 2007.”

China — the land of opportunity