Increasing optimism for local, global economies sees rebound in confidence
Investor confidence has rebounded since December, according to JP Morgan Asset Management's quarterly survey on investor sentiment.
The JP Morgan Investor Confidence Index, designed to demonstrate local investor sentiment towards the Hong Kong market over the next six months, went up from 105 in December to 118 last month.
The index was based on a survey of 507 individual investors.
JP Morgan Investment Centre head Catherine Mow said the rebound was driven by investors' increasingly optimistic outlook towards both the local and global economic environments.
The survey found that 84 per cent of the investors interviewed preferred to invest in Hong Kong instead of overseas over the next six months, while 48 per cent expected the Hang Seng Index to trade between 22,001 and 26,000 by the end of September.
Emerson Yip, investment manager with the bank's Greater China team, said Chinese companies and banks would increasingly prove to be attractive to international investors.
He said they had been reluctant to invest in mainland companies and banks because international media had been playing up negative news like non-performing loans, corporate governance and the possibility of a hard landing.
However, mainland stocks were trading at attractive price levels and their longer-term growth prospects were robust, as proven by strong earning results, Yip said.
He also said the sell-off of mainland bank stakes by global banks, such as Goldman Sachs' offloading of shares in Industrial and Commercial Bank of China yesterday, should not overshadow the stock performance of mainland banking stocks. He argued that global banks had already sold half their stakes in mainland banks and said he continued to prefer Chinese financial stocks.
He was also bullish on properties, Chinese consumption, as well as Macau gaming stocks, which have already attracted international pension funds for their steady growth in earnings.
Although underweighting Hong Kong banking stocks in general, Yip said smaller Hong Kong banks were the space to watch as they were increasingly attractive to global banks that wanted to expand in China in light of the faster pace of yuan internationalisation.
He also said he expected smaller local banks in Hong Kong to be willing to sell, given that it was difficult to compete with heavyweight players in scale, international network, and product variety.
The Hang Seng Index fell this number of points yesterday
- It closed at 20,610,64 points, down 0.44 per cent