Best in show

HONG KONG:Hongkongers have never been afraid to put their chips down. About one-third of the city's seven million citizens have investments in financial products, with most trading stocks.

And they saw respectful earnings as individual investors in 2006: nearly 86 percent of them made profit in the stock market, according to a poll among 9,000 Hong Kong investors, conducted by the Association of International Accountants Hong Kong and Taifook Securities. The two organizations received feedback from 2,000 investors, 40 percent of whom were women.

Respondents also selected their favorite stocks in 2006, taking investment returns, company reputation and corporate governance into consideration.

Among the top ten, financial players made up the majority, and six mainland firms made the list. Here's the top ten and why they were chosen:

HSBC

Though its share price did not rise as rapidly as mainland counterparts, HSBC still won investors' favor for its corporate governance and steady growth.

As the market's largest mover, investors see it as a stock that can be trusted.

HSBC stocks increased moderately by 8 percent from HK$125 at the beginning of the year.

Recent sluggishness is mainly blamed on the underperforming North America market. In the third quarter, its mortgage and banking businesses in the market recorded a 15.5 percent year-on-year setback in net profit.

To appease shareholders, the bank's new chairman, Stephen Green, promised to improve corporate governance in hopes of recovering investor confidence.

HKEx

Hong Kong's stock exchange is the best-performing blue chip.

Thanks to its record-breaking IPO (initial public offering) listings and mega IPOs of mainland lenders, Hong Kong Exchanges and Clearing Ltd (HKEx) came out ahead of other blue chips as measured by surge in share price. Its shares soared more than 200 percent from the beginning of the year.

Given the funds raised from its all-time high IPOs of HK$342.2 billion, the bourse's net profit gained 74 percent in the first nine months of the year, to HK$1.67 billion.

China Life

China Life Insurance Co Ltd is too unique to be ignored. It is, after all, the largest life insurer in the world's most populous market.

The company successfully listed on the New York Stock Exchange on December 17, 2003, and one day later, on the Hong Kong Stock Exchange.

At the end of 2006, the company launched its IPO process and applied to list on the Shanghai Stock Exchange, making China Life the first insurance company in the world to be listed in three different bourses.

China Life's IPO in Shanghai raised its market value to $132 billion, making it the second biggest insurer in the world after American International Group Inc, which has a market value of $186 billion.

ICBC

To Hong Kong investors, being big means stability and profit. The country's top lender, Industrial and Commercial Bank of China (ICBC), attracted the spotlight worldwide with the largest-ever IPO to date. It was also the first company to debut simultaneously on both the Hong Kong Stock Exchange and Shanghai Stock Exchange.

ICBC's $21.9 billion IPO, which was overwhelmingly oversubscribed by investors, corporate and individual alike, had to issue more shares than originally planned to meet the strong demand.

Three heavyweight strategic investors, ahead of ICBC's massive IPO, injected $3.7 billion into the Beijing-based bank. Goldman Sachs purchased a 5.8 percent stake for $2.6 billon, the largest sum Goldman Sachs has ever invested. Alliance Group Bank injected $1 billion, and American Express invested $200 million.

BoCom

Any investor who has purchased shares in Bank of Communications (BoCom) should be very happy with his or her decision. Share price in the mainland's fifth-largest bank soared over three fold higher than its IPO price of HK$2.5.

Many shareholders said they shifted funds from other stakes into BoCom, eyeing its rapid growth.

The Shanghai-based bank raised $1.88 billion in a popular initial public offering in Hong Kong in June 2005. Strong demand from share applicants helped the lender fix the price near the top of an indicated range of HK$1.95 to HK$2.55, representing 1.6 times its estimated book value at the end of 2005.

BoCom was the very first mainland bank to float shares in Hong Kong and beautifully set the tone for future listings by mainland lenders.

CCB

China Construction Bank (CCB), the mainland's third largest lender, is well liked by Hong Kong investors for its strong development plans.

During its $9.2 billion IPO, huge lines of people waited anxiously to get shares.

The mainland's top property bank purchased the Hong Kong-based subsidiary of the Bank of America for $1.24 billion late last year.

China Mobile

Whether they like it or not, many Hong Kong investors have to keep an eye on China Mobile Communications Corporation. It is a heavyweight in Hong Kong's benchmark Hang Seng Index; it is the sort of stock which traders say "if it sneezed, the stock market might catch a cold."

China Mobile ranked as the world's largest mobile telecommunications operator by number of subscribers with over 300 million customers, about two thirds of the nation's total.

China Mobile has a 65 percent share of the highly competitive Chinese mobile market.

Mass Transit Railway

The overseer of Hong Kong's public transport has continued its reliance on property development. In the first half of 2006, the company booked HK$5.17 billion from the revaluation of investment properties, increasing 98.8 percent from the previous year.

Given upcoming projects, such as auctioning the Tseung Kwan O 56 district, it seems property revenue will remain the driver of the company's growth.

Furthermore, the MTR signed a Memorandum of Understanding on a proposed merger with the Kowloon-Canton Railway Corporation (KCRC) in April.

In the mainland market, the Beijing Line 4 project obtained its business licence in January, 2006, and the related lease agreements were signed in April. The project is being jointly developed with the Beijing Infrastructure Investment and Beijing Capital Group.

CMB

China Merchants Bank (CMB) was well known in Hong Kong even before it staged a public roadshow in the city because of its parent company China Merchants Group, a household name in the territory.

The mainland's sixth-largest bank attracted overwhelming demand in its $2.4 billion IPO, pushing the bank to increase its retail portion from 5 percent to 20 percent in response to a 226 times over- subscription. It overtook its bigger home rival BoCom, which received 205 times over-subscription.

CMB is regarded as one of the country's best-run banks with good services, especially in retail banking.

Esprit

The apparel maker's name is so well known in Europe that Hong Kong investors on the other side of the world are fans.

Despite the company's founder, Michael Ying, stepping down, Esprit's business remained strong over the past year. Its earnings and turnover saw double-digit growth in the first half. The company posted 16.4 percent growth in net profit to HK$3.7 billion.

New chairman Heinz Krogner revealed the company will pour HK$1.2 billion to HK$1.4 billion on expanding its global retail areas in 2007. The company hopes to raise its Asia region turnover threefold in five years, representing a 15 percent to 35 percent total turnover.

(China Daily 01/20/2007 page4)