Market players cautiously optimistic
The nosebleed level of the Hong Kong stock market speaks for the exuberance investors have toward the local and mainland economies, according to JF Asset Management.
In a survey by the firm, investor confidence in the near-term development of the Hang Seng Index (HSI), investment atmosphere and local economy all touched record highs.
"The results indicate that Hong Kong investors are now more bullish and expect to benefit from further investment opportunities in the longer term," said Terry Pan, head of retail business at JF Asset Management.
However, there are indications that investors are becoming more cautious at the same time. Among the investors polled, 46 percent intended to take an aggressive approach to investments in the next six months, slipping 6 percentage points over the last survey in June.
Also, 32 percent of investors who hold a positive outlook for the stock market said they have no intention to increase investment assets in the near future.
"Retail investors are becoming a lot more jittery as the index rallies higher," said Conita Hung Lai-ping, Delta Asia Financial's head of equity markets. "They tend to jump in and out of the stock market quickly."
Hung said investors are lured to the market by the seemingly endless rise of the index, but the possibility of a plunge worries them at the same time.
The local benchmark catapulted to a record high of 29,920 on Tuesday at one point - 80 points shy of the psychologically important 30,000 level. The gauge for mainland enterprises, H-share Index, also crossed the 20,000 level for the first time on Tuesday, before easing to close at 19,441.
China Mobile touched HK$148.8, gaining 7.8 percent on Tuesday before easing to close at HK$143. The mobile communications provider became the major driver behind the HSI's bull run, offsetting the slump in HSBC Holdings and Hong Kong property stocks.
"It's apparent that not all stocks across the board are on the rise. The HSI is driven up by several heavyweights, particularly mainland enterprises," said Hung. She believes capital influx from the mainland is fuelling the market rally.
"Mainland money will likely be drawn into mainland enterprises rather than blue chips, so I expect H shares and red chips will exert more and more influence on the HSI," Hung said. But she added that given the more volatile nature of the H-share Index, the local stock market benchmark is likely to experience large fluctuations.
The HSI saw a roller-coaster ride of over 1,000 points on Tuesday to close at 28,954, while turnover reached HK$210 billion.
(China Daily 10/18/2007 page15)
