Bargains galore
After sliding precariously for several months, Hong Kong’s stock market appeared to have regained ground last week, raising hopes that the bears have finally run their course.
In the past few trading days, the Hang Seng Index had managed to stage a smart rebound on increased daily turno v e r. S t o c k a n a l y s t s , however, are still cautious in making predictions, but they agree that the price adjustments made in the past months amid a spate of bearish news are largely over.
The market, they say, has largely discounted the uncertainties over US interest rates. The U S Fe d e r a l R e s e r v e’s decision to delay a rate hike at its meeting last month has sparked fears that the global economy is worse than predicted. Since then, global equity markets have largely recovered from a sell-off despite lingering concerns.
I t ’s w i d e l y b e l i e v e d the Fed will raise rates before the end of the year. Such an increase is good for banks as it provides room for them to widen their profit margin, or spread, in their lending business.
The local stock marke t has also been troubled by forecasts by some analysts of an impending fall in property prices, basing their prognosis largely on the drop in transactions in the secondar y-homes market over the past few months. This was seen to have contributed to the recent mini market crash.
Despite the dire predictions, real-estate prices in all market segments have held firm. There aren’ t signs yet that homes owners are in a rush to sell, while demand, especially for
are traded at an average multiple of under 10 times, which is low for an economy that is set to grow by 2 percent to 4 percent annually. smaller apartments, shops, mainly drug Kong’s total economic has remained high, as stores that cater excluoutput. demonstrated by the sively to mainland visiAt current prices, big rush by prospective tors, have pulled down Hong Kong shares are buyers for the latest the shutters, dragging trading at an average batch of governmentdown rentals of retail multiple of under 10 built flats. premises in several busy times, which is low for
Since early this year, commercial districts. an economy that is set investor sentiment H o w e v e r, d o m e s - to grow by 2 percent to has been depressed tic consumption has 4 percent annually in by largely exaggerated stayed robust, boosted the coming years. The talk about the possible by strong demand from downside of buying collapse of the tourism workers which, in turn, shares now seems limindustry as visitor arrivhas pushed up average ited. als, particularly from the wages. After all, tourism This may be the time Chinese mainland, conincome accounts for less for some serious bargain tinue to shrink. Some than 5 percent of Hong hunting.