All bets on 'through train' stocks
Updated: 2014-11-07 07:54
By Sophie He and Selena Li in Hong Kong(HK Edition)
Despite the bearish economic outlook clouded by the "Occupy Central" protests, stock analysts said they are confident that Hong Kong share prices will remain stable, while stocks related to green industries, healthcare and the Shanghai-Hong Kong Stock Connect are expected to outperform the market.
The benchmark Hang Seng Index is widely expected to stay within the range of 23,000 to 24,000 points, Ben Kwong Man-bun, director of KGI Asia, told China Daily.
"The launch of the (Stock) Connect arrangement is only a matter of time, and since there's still a price difference between Shanghai-listed A-shares and Hong Kong-listed H-shares of the dual-listing companies, local investors can still bank on the companies' growth potential," he said.
Kwong suggested enterprises backed by government policies, like those in the environment industry, healthcare and e-commerce, remain a good bet.
"Premier Li Keqiang recently told a State Council meeting that the government needs to support new ways of consumption, such as online shopping, to stimulate private consumption growth," he said.
Investors may also want to pay attention to State-owned enterprises (SOEs) that are being restructured. "Shares of some of SOEs may have underperformed for a very long time, but their prices stand to benefit from reform," Kwong added.
However, he warned investors to be cautious with stocks that are sensitive to economic cycles. The resources and industrial sectors are vulnerable to the pressure of overcapacity, which is still weighing on the mainland's economy.
"Though the protests in Hong Kong have aroused concern among investors, the Hang Seng Index (HSI) still managed to gain more than 1,400 points in October, thanks largely to expectations of the launch of the Stock Connect program," said Francis Kwok, marketing director of Bright Smart Securities.
With the HSI having gained about 1,500 points since early November, Kwok believed the stock market will soon enter a phase of adjustment and profit-taking. He suggested that local investors, who had missed the entry point earlier, can start buying when prices begin to fall in the event of a correction.
Kwok advised retail investors to go for shares of Hong Kong Exchange and Clearing, as well as those of mainland brokerages, such as Haitong Securities Ltd, that are related to the Stock Connect scheme.
Other blue-chip stocks on Kwok's "buy" list include those of HSBC Holdings plc, Tencent Holdings Ltd, China Mobile Communications Corporation and AIA Group Ltd.
AIA shares closed at HK$43.3 ($5.58) on Thursday - up almost 5 percent from HK$41 a month ago.
For long-term investors, Kwok said mainland banks and property developers should appeal to them. "At current prices, shares of mainland property companies are at an average 30-percent discount to assets," he said.
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(HK Edition 11/07/2014 page8)