Reuters News Article HSBC turns cautious on China and Hong Kong Fri 16 April, 2004 04:39 PM
SINGAPORE (Reuters) - HSBC Asset Management has turned bearish on the stock markets of China and Hong Kong due to valuation concerns and the mainland's move to cool its economy, the unit of UK bank HSBC says. But it favours the markets of India, Taiwan and Thailand due to their robust economies and growing domestic consumption, said Ayaz Ebrahim, chief investment officer for Asia-Pacific (ex-Japan) equities at HSBC Asset. "We have decreased our weightings in Hong Kong and China lately. Those are two areas that we have reduced exposure to, but we are not big underweights in them," he told a news conference. HSBC Asset managed $24.1 billion (13.36 billion pounds) in Asia as of late December, making it one of the biggest investment houses in the region. China, unwilling to raise interest rates or adjust its exchange rate, is using an assortment of ancillary measures to cool investment, and is telling banks to keep more money in reserve, rather than lending it. "In terms of the economy, certainly, there are concerns about overheating at the moment," said Ebrahim. "There's a policy in place at the moment to try and cool things down. We are going to see lower levels of GDP as a result, although GDP will still be healthy." China's economy expanded 9.7 percent in the year through the first quarter, buoyed by heavy investment that helped fan fears of economic overheating and expectations of further credit tightening. Thailand, with expected gross domestic product (GDP) growth of nearly six percent, corporate earnings growth of 12 percent and 11-12 price-to-earnings (PE) ratios in 2004, remained a favoured market, Ebrahim said. HSBC viewed India positively as earnings were expected to grow 20 percent, PE would be only 13.5, and investors liked the openness of the companies, he said. "As investors, we are very comfortable to invest in India because the level of corporate transparency is very high." ########################################################################## # Send submissions for Goanet to [EMAIL PROTECTED] # # PLEASE remember to stay on-topic (related to Goa), and avoid top-posts # # More details on Goanet at http://joingoanet.shorturl.com/ # # Please keep your discussion/tone polite, to reflect respect to others # ##########################################################################
