Tycoon changes tune on Hang Seng fortunes

PUBLISHED : Wednesday, 30 January, 2008, 12:00am
UPDATED : Wednesday, 30 January, 2008, 12:00am

Property tycoon Lee Shau-kee, known as 'Asia's Warren Buffett', has toned down his bullish prediction for the benchmark Hang Seng Index, citing turmoil in the equity markets and a possible recession in the United States.

'The HSI will hover between 27,000 and 30,000 in the first quarter, and faces greater downward pressure in the second quarter,' Mr Lee said yesterday. 'In other words, the market will be volatile.'

Known for his bullish view on equities and frequent participation as a cornerstone investor in share sales, Mr Lee has become a local guru on initial public offerings.

In December - less than a month after predicting that the HSI would return to 30,000 by the year's end - he delayed that target to the first quarter of this year, citing the turmoil in global financial markets.

He further tweaked his prediction yesterday, blaming market volatility on negative factors including the subprime crisis in the US and the rogue trader scandal at Societe Generale in France.

He declined to look further ahead in his crystal ball, and vowed to make fewer predictions in the future.

'I am not truly a Midas of stocks, just a pretender,' the tycoon said. 'What I shared before was my experience. I don't want to see investors spending all their time on stocks - just because they think they have market information - and abandon their real jobs. Investors should seek advice from established financial institutions, not from me.'

Having said all that, Mr Lee once again shared his investment experience yesterday. He is holding on to shares he bought as a cornerstone investor, noting that the stocks had increased in value from HK$15 billion to HK$45 billion.

Quality stocks should be held for the long term, he said, quoting as examples energy plays China Shenhua, China Coal, China National Offshore Oil and PetroChina. He also likes China Life and the China Merchants Bank.

On the other hand, Mr Lee said mainland property plays would remain under pressure due to Beijing's commitment to rein in inflation, although he takes an optimistic long-term view on the sector - with China Overseas Land and Investment and Country Garden favourites.

He is upbeat on the mainland market, citing strong growth prospects, but not about the US, saying its economy had yet to hit bottom.

All in all, Mr Lee advised buying mainland-related stocks and taking short positions in US stocks.

He also said the Australian dollar - which he said offered a 14 per cent annual return through currency appreciation and interest - may be a good hedge against the waning US economy.