Mainland stocks should extend their rally into next year as the economy got a boost from a pick-up in exports and consumer demand, but a bumpy ride was expected this quarter, partly because of a glut of initial public offerings, an HSBC fund manager said.
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Mainland rally seen extending into 2010
Reuters in Taipei
02 October 2009
Mainland stocks should extend their rally into next year as the economy got a boost from a pick-up in exports and consumer demand, but a bumpy ride was expected this quarter, partly because of a glut of initial public offerings, an HSBC fund manager said.
Among the world’s top performers this year, mainland stocks would continue their momentum, with the country’s economy expanding more than 8 per cent this year and next, Richard Wong, an equities investment director of HSBC Global Asset Management, said yesterday.
“Chinese companies are increasing their market share globally after the financial crisis. And China will benefit most as the world economy recovers from the downturn,” he said.
“If you look at ratios, Chinese shares are not expensive either,” he said, referring to their strong earnings growth and price-earnings projections. H shares were estimated to trade at 15 times forward earnings next year, about flat from this year’s level but much lower than the 25 times peak hit in 2007.
Investors could also benefit from currency gains, he said, adding that the maximum Beijing could allow the yuan to appreciate against the US dollar was 5 per cent a year.
Wong said he preferred retail, online gaming, vehicles, cement, copper, export-related shipping and textiles shares.
Selling pressure, however, was likely to emerge this quarter, owing in part to an increasing number of new share sales, he said.
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