THE past nine months have been a pretty awful time for stock investors in Hong Kong.
Other Asian stock markets have powered ahead in spite of interest rate rises, while the Hang Seng Index is still 22 per cent below its peak in January.
An optimist would like to hope things will get better soon, but the reality is the market may well stay stuck below the 10,000 mark for the remainder of the year.
With bonus time due next month, many investors may be tempted to run out and pile their money into speculative second line stocks in the hope they will rebound once the market gets better. Do not bet on it.
If there is one thing this bear market has taught it is that quality stays while rubbish blows away.
Foreign investors are only interested in quality stocks with solid earnings. While the upside potential may not be as high, there is little risk of losing a packet or being surprised by bad news.
When the market does rally the blue chips will be the first to gain.
One of the best positioned is Wharf Holdings.
The company has a strong presence in the commercial and office property sector, which is expected to stay strong unlike the residential market, and it has one of the strongest property portfolios which guarantee it a reliable cash flow.
According to Kleinwort Benson, it should also get an earnings boost from redevelopments under way, including the Gateway in Tsim Sha Tsui. Around 85 per cent of earnings come from property.
All this is pretty much in the price but the big unknown is cable TV.
If it is successful, it could prove a good source of recurrent income and give the group an excellent base on which to expand its media interests.
But returns may be a long time in coming, as the company tries to wire up as many houses as it can in the territory.
However, the lead it has on its competitors because of its initial exclusive franchise should put it in a strong position.