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Veteran analyst Chen Li of Soochow Securities is optimistic about Hong Kong stocks, says prices yet to reflect improved earnings outlook
- Sentiment is currently being swayed by the uncertainties of China-US relations rather than the economy or strength of earnings, Chen says
- Dual trading counters and widening price discrepancy between local shares and mainland stocks of dual-listed Chinese firms to boost Hong Kong stocks
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Zhang Shidongin Shanghai
Veteran analyst Chen Li has become upbeat about Hong Kong stocks, the worst-performing major equity market globally in May, as current prices are yet to reflect an improving outlook for earnings growth with investors too preoccupied over geopolitical risks.
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The city’s US$5.2 trillion stock market has not priced in earnings optimism after bellwether companies ranging from Alibaba Group Holding and Tencent Holdings to Baidu all registered faster profit growth in the first quarter of this year, Chen, chief economist at Soochow Securities in Shanghai, said in an interview on Thursday.
Sentiment is currently being swayed by the uncertainties of China-US relations rather than the economy or strength of earnings, Chen said. “Hong Kong stocks are attractive enough because of low valuations and prices,” he added.
“Be optimistic and grit your teeth amid the dip in the market.”
Chen, known for accurate calls on the boom-and-bust cycles of Chinese stocks, has more than 20 years of experience as an analyst and strategist working for Shenwan Hongyuan Group, Harvest Asset Management and UBS Group. His views were echoed by Hong Hao, chief economist at Grow Investment Group, who said this week that Chinese stocks would resume gains on either brightening prospects for the US economy or increased policy support from Beijing.
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