NEW YORK (TheStreet) -- China's move to raise interest rates mid-October, for the first time in three years, spooked stock markets. In fact, it had a ripple effect as lending rates and deposit rates were hiked 25 basis points (bps) to 5.56% and 2.5%, respectively, to cool the overheated economy.The October inflation reading of 4.4%, the highest since September 2008, could spark off a further rate hike. Meanwhile, rate hike worries triggered risk aversion and led to a 10% wipe out during the last two weeks. Economists believe that China will increase reserve requirement ratios by 100 bps as well as raise interest rates by 50 bps by March 2011. However, we believe that these rate-hike fears are overstated and investors with risk appetite can enter the markets at these low levels and lock in their funds for the long term. We have identified 10 China large-cap stocks with upside of more than 13% and a market cap of at least $20 billion; investors can consider these for their portfolios. The portfolio is diversified with stocks chosen across sectors like banking and financial services, mining, telecom and energy. Banks and financial services companies like China Merchants Bank ( CIHHF), Bank of Communications ( BCMXY) and China Pacific Insurance ( CHPXF) are expected to deliver superior profitability in the upcoming days. Overall, analysts foresee earnings growth of 20% for 2010-11 for these stocks. U.S. banks like Goldman Sachs ( GS), JPMorgan Chase ( JPM), American Express ( AXP) and Wells Fargo ( WFC) are trading at a discount, while Chinese banks listed here offer lucrative investment opportunities, considering that the fears of higher growth rates and asset quality are easing. Companies engaged in coal and operation of coal mines like China Shenhua Energy ( CSUAY) and China Coal Energy ( CCOZY) have been preparing major expansion plans, focusing on cost-containment. We expect these two companies to deliver earnings growth of 20%. However, reports of the government stepping in to cap domestic coal output could be negative. Energy majors like PetroChina Company ( PTR - Get Report) and China Petroleum & Chemical Corp ( SNP - Get Report), which are diversifying into natural gas, would benefit if the proposal to reform the natural gas pricing falls through. Analysts believe that Petro China and Sinopec have factored in the pessimism and can be bought on weakness. The China energy stocks we have selected are trading at 7 to 10 times one-year forward earnings and at a discount, compared to Exxon Mobil Corporation ( XOM), Conoco Philips ( COP) and Occidental Petroleum ( OXY). In addition, China Telecom Corporation ( CHA - Get Report) is a consumption play with diversified offerings.