SHANGHAI - Since the opening of the parliamentary sessions in Beijing last Wednesday, stock analysts and investors in Hong Kong and Shanghai have been closely watching the official speeches and sideline interviews for investment hints.

Interviews with investment experts in both cities have shown that their preferred sectors were similar. At the top of the list are the pharmaceutical and transportation sectors, which are expected to be the big beneficiaries of lavish government spending in the coming three years.

Jing Ulrich, JP Morgan's Hong Kong managing director, said that healthcare and pharmaceutical stocks deserve high ratings because the central government has indicated that it will step up its efforts to provide affordable and reliable medical service to people around the country. The other sectors favored by Ulrich included consumer, travel and e-commerce as the government has said it's keen to further push domestic consumption.

She was also bullish on the environmental sector, which was highlighted in Premier Wen Jiabao's government work report. "Sectors related to clean technology will be encouraged by the government as the country is seeking a greener economy and more sustainable growth avenue," Ulrich said.

"In addition, the central government also provided reassurances that there would be help for Xinjiang Uygur Autonomous Region's and Tibet Autonomous Region's economic development, and that the positive performance of related stocks is highly anticipated," said Li Xianmin, an analyst with Minsheng Securities.

Li said he was not surprised by the interest of Hong Kong investors in the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) meetings. "Deepening business connections between the mainland and Hong Kong has made the Hong Kong stock exchange more sensitive than ever to major news from the central government, especially the two sessions," he said.

Over the past week, listed energy shares staged a rally on the positive news from the two sessions. "The price surge came shortly after the 'No 1 proposal' was made by the Jiu San Society, one of the nation's eight non-Communist parties, saying that China should develop a low-carbon economy to become more environmentally friendly," said Guo Wanda, vice-president of the China Development Institute, a government think tank.

"The proposal has heightened market expectations that the government will channel more resources and efforts into the green economy," added Guo.

In Shanghai, new energy stocks also saw an across-the-board price rise. The lavish spending on high-speed railway projects also buoyed up major railway stocks yesterday.

"Although the Hong Kong stock market is also influenced by the international economic events, the mainland bourses have more influence over the Hong Kong stock market," Li said.

(HK Edition 03/10/2010 page2)