China must still consolidate the highly fragmented industry, and margins of dairy makers may narrow once commodity prices creep up, he said.

The Road Ahead

The past year has seen a 20-percent rise in the Shanghai A-share stock market, but recently it has experienced both up and down trends in a way that has wracked the nerves of numerous investors. The aggressive economic stimulus lifted Chinese stocks out of bearish territory, but trading is growing choppy as a huge supply of IPO (initial public offering) shares weigh on investors' sentiment.

The shift is a reminder that the Chinese stock market is not as strong as people expected. But does it signal a gloomy picture ahead? Fund managers say no.

According to a recent survey by the Shenzhen-based Investor Information Co. Ltd., more than 100 open-ended fund managers, 92 percent of respondents, see the promise for growth in the months to come, citing a higher level of corporate earnings visibility.

The CPI is likely to record positive growth in the fourth quarter, providing a floor under corporate margins, said the Zhonghai Fund Management Co. Ltd., in a report.

The flood of new shares will inevitably dampen investors' moods, though the broader economic climate will continue to warm up, said Wang Yawei, Deputy General Manager of ChinaAMC Fund Management Co. Ltd. Downturns in valuation could offer entry points for long-term investors, he said.

In addition, a majority of the polled fund managers expressed confidence in the emerging low-carbon industries and buoyant consumption sectors, such as catering and tourism.

Flying High

China's civil aviation industry is picking up momentum as the domestic business skies begin to clear.

According to data from the Civil Aviation Administration of China (CAAC), the industry, including airlines and airports, generated a combined profit of 9.21 billion yuan ($1.35 billion) from January to September this year. Airlines brought in 6.13 billion yuan ($896.85 million) in profits, marking a sharp rebound from the same period last year.

What sent the industry reeling was also an overcapacity problem as airlines put more seats in the air than demand could handle. But with the government incentives gaining traction, domestic demands are bouncing back quickly. The air passenger traffic volume grew by 23.6 percent from a year earlier in the first nine months of this year, according to the CAAC.

A recent cut in jet fuel prices also helped airlines get airborne once again, said Wu Li, a senior analyst with the Guotai Jun'an Securities Co. Ltd., in a recent report.

It is still too soon to tell if a substantial turnaround is underway for the aviation industry, Wu added.

Telecom Headwinds

Intensifying competition and soaring costs on 3G networks are exacting a heavy toll on China's telecom operators.

China Mobile, the world's largest wireless carrier in terms of subscribers, reported a sluggish growth rate of 2.6 percent in profits from July to September while China Telecom, the country's top fixed-line operator, witnessed a painful 48-percent drop in net earnings in the third quarter.

Competition is heating up for major operators as the industrial restructuring earlier this year allowed China Telecom into the wireless market. In addition, the three major mobile operators have been spending heavily on 3G network building and marketing.

Both China Mobile and China Unicom are losing momentum as the numbers of new mobile users fizzles out. The pain of China Telecom was no less acute since its total number of access lines in service slipped 4.3 percent in the first half of this year. Meanwhile, diversifying from the saturated urban market, operators have to make a push into rural areas where farmers have much less to spend, said analysts.

"Nevertheless, we see a bullish long-term prospect with leverage on our market penetration, infrastructure advantages and improving services," said Wang Jianzhou, Chairman of the Board of China Mobile.

"Despite short-term financial pressures, the company will continue to tap the high-end 3G users and enhance value-creation of its products," said Wang Xiaochu, Chairman of the Board of China Telecom.