Billionaire Li Ka-shing, who warned of a bubble in China’s stock market months before it plunged, said Hong Kong investors should be cautious about buying shares after the benchmark index surged 52 percent since early March. The comments from Hong Kong’s richest man yesterday follow his March 26 statement that investors with cash should consider buying equities and real estate. The Hang Seng Index has surged 22 percent since then.
1 comment:
Billionaire Li Tells Investors to ‘Be Careful’ on Stock Market
Theresa Tang and Mark Lee
22 May 2009
(Bloomberg) -- Billionaire Li Ka-shing, who warned of a bubble in China’s stock market months before it plunged, said Hong Kong investors should be cautious about buying shares after the benchmark index surged 52 percent since early March. The comments from Hong Kong’s richest man yesterday follow his March 26 statement that investors with cash should consider buying equities and real estate. The Hang Seng Index has surged 22 percent since then.
“If you ask me if the stock market can go higher, it’s possible,” said 80-year-old Li, known as ‘Superman’ (“Chao Ren”) locally because of his investment acumen. “But be careful, the economy still has some problems this year.” Li spoke to reporters after the annual shareholder meeting of his flagship real estate company Cheung Kong (Holdings) Ltd.
The Hang Seng has climbed 52 percent from a four-month low on March 9 as investors speculated stimulus packages by governments worldwide, including a 4 trillion yuan ($586 billion) spending pledge by the Chinese government, will ease the global economic slump.
“It was quite a downbeat statement from Li but probably a sensible one,” said Andrew Sullivan, a sales trader at Mainfirst Securities Hong Kong Ltd. “A lot of retail investors will listen to that.”
Hong Kong’s economy could shrink by as much as 6.5 percent this year, according to government forecasts, which would be the biggest decline since the data series began in 1962. A May 19 report showed Hong Kong’s jobless rate rose to the highest in three years.
Hang Seng Drop
“Recovery in the stock market usually comes before the economy, but it’s not every time,” said Li. His estimated fortune of $16.2 billion is the second highest in Asia, after Mukesh Ambani’s $19.5 billion, Forbes magazine said in March.
The Hang Seng Index dropped 3.4 percent in the week ended May 15, the biggest decline since the week ending March 6, amid concern stocks were too expensive relative to earnings prospects. The average valuation of companies on the gauge climbed to 15.8 times reported profit on May 19, the highest since January 2008.
Li said on May 17, 2007, that China’s stock valuations at the time “must be a bubble” and prices were likely to decline. The Shanghai Composite rose 30 percent through the end of that year, only to plunge 65 percent in 2008.
The billionaire is still recommending property as an investment. Real-estate investors are “sure to make money” over the next 3 to 4 years, he said today, adding that he’s still buying land in China.
Stable Prices
Hong Kong home prices may rebound to levels seen in early September, before the global financial system imploded, Centaline Property Agency Ltd. said on May 16. Centaline’s home-price index has jumped 13.3 percent this year.
In April, Hang Lung Properties Ltd. Chairman Ronnie Chan said Hong Kong home prices are unlikely to fall further and Goldman Sachs Group Inc. upgraded local property companies to “neutral” from “cautious.”
Shares of Cheung Kong, Hong Kong’s second-largest developer by market value, fell 1.2 percent to HK$83 yesterday. The stock has gained 13 percent this year, lagging behind the Hang Seng’s 20 percent advance. The Hang Seng Property Index, which tracks six developers, jumped 26 percent over the same period.
Post a Comment