Big winners tipped amid mainland's urban shift

Construction, commodity and retail stocks were likely to be the biggest winners from Beijing's economic policies next year, analysts said.

Promoting domestic consumption and urbanisation would be key themes on the mainland next year, Xinhua said after the country's annual economic policy-setting conference yesterday.

Christopher Cheung Wah-fung, legislator for financial services in Hong Kong, said urbanisation could mean villages being transformed into urban areas as well as more people moving from the countryside to live in the city. "In both scenarios, we can predict there would be more building construction and more demand on resources. This would boost stocks in construction, property, commodities and retail," he said.

Brett McGonegal, chief executive of Reorient Financial Markets, said urbanisation was critical to boosting domestic demand. "As China continues to transition from a low-cost-labour and export-driven economy to a domestic-demand-driven economy, the establishment of larger urban centres is crucial," McGonegal said. "As cities expand, so too does housing, schooling, health care and physical infrastructure, thus increasing capital expenditure. This is a critical phase of development, as it spurs personal consumption and government expenditure."

McGonegal said the growth would benefit sectors such as heavy machinery, cement, housing and commercial property developers, retailers and luxury goods makers.

Alex Lee, from investment management firm BEA Union, said the transition of the economy from capital spending to consumption would create both losers and winners in terms of stock prices.