Mainland stocks attractive after fall to 2009 low

Mainland stocks are attractive compared with the past and their regional peers, and investors should buy more "deep cyclical" sectors tied to the country's recovering economy, HSBC Global Asset Management said.

The Shanghai Composite Index yesterday fell 1.03 per cent to 1.959.77 points, the lowest close since early 2009. It is now trading at nearly 11 times last year's earnings, the lowest since at least 1997.

Cement and sportswear makers might have the best opportunities to outperform the market next year, said Mandy Chan, an investment director and the head of Chinese equities at HSBC.

Chan said it was unlikely that the market would weaken further because it was relatively inexpensive now.

Cyclical shares have been underperforming the market this year.

The three leading Hong Kong-listed mainland cement companies - China Resources Cement, Anhui Conch Cement and China National Building Material - have gained on average only 4.6 per cent so far this year. That compares with an 18 per cent growth in the Hang Seng Index.