The Hong Kong stock market will see a growing trend towards asset injections in red-chip companies in the first half of this year, analysts say.
Leong Chong, senior analyst of China research at ING Baring Securities (Hong Kong), said he expected red chips' parent companies would increasingly inject assets into their subsidiaries ahead of the July 1 handover to make them more attractive to investors.
A number of red chips have received asset injections resulting in spin-offs in recent months, such as Guangzhou Infrastructures.
Mr Leong said red chips had increasingly become the preferred choice for investors seeking to expand their exposure in China.
'Red chips' market capitalisations are larger and the profitability is better [than H and B shares],' he said.
The market capitalisation of all red chips was almost 3.7 times the combined market capitalisation of all the H and B shares, Mr Leong said at a seminar on red chips organised by ING Barings.
