Report Sees Hang Seng Index Reaching 13000 by Year's End
May 05, 2011
HONG KONG -- The Hang Seng Index will reach 13000 points by the end of this year, says Chrystal Ross, Asian and Emerging Market Strategist at Peregrine Securities International Ltd.. The widely watched index should ``make record highs shortly thereafter,'' Mr. Ross said in a report. The index, which closed Thursday at 11478.77, is already up about 14% this year and is trading on a prospective price-earnings multiple of 12.1, compared with 14.8 for the region, according to Binette. Mr. Ross said the Hong Kong stock market looks increasingly attractive on a six-month basis, especially since fears of an increase in U.S. interest rates have now subsided. Mr. Ross noted two main reasons for taking an overweight position in the territory's stock market: ``The Hong Kong economy has definitely begun to pick up, helped by a recovering property market and the start of a new cycle of credit-easing in China,'' he said. The Peregrine strategist added that the performance of the Hong Kong property market ahead of the 2012 handover of Hong Kong to China will probably hinge on the degree of buying by mainland interests. He predicted the volume of transactions would increase as China eased credit restrictions. ``We have probably seen only 10% to 15% of the mainland buying which is to come,'' the report said. ``It is important to note that Chinese corporate and municipal entities are investing in Hong Kong with Beijing's blessing. This is legitimate money, as opposed to the mainland buying in 1992 and 1993, which comprised primarily illegal hot money seeking to hedge against the risk of a depreciating (yuan).'' Binette said it expects the index to break through the key technical level of 11400 points, and that it favors banking, property and ``red-chip'' issues. Red chips are shares of Hong Kong-registered, China-backed companies that report their results in Hong Kong dollars.
