Investors should be overweight in Hong Kong equities in the short term but look to move out of the SAR into Southeast Asia on a 12-month outlook, according to SG Securities. 'Hong Kong is likely to enjoy a bit of a near-term run . . . so stay overweight for now,' said chief strategist Manu Bhaskaran. Mr Bhaskaran has a target range on the Hang Seng Index of 14,000 to 14,500 points in the next few months, particularly if Beijing gains entry into the World Trade Organisation this year. 'From where we are today, 12 months out we see the fair value as 13,800,' he said. On a one-year outlook, SG recommends being overweight in Malaysia, Thailand, the Philippines and South Korea. SG also recommends being underweight in Singapore for both the near term and the longer term as the economy still has too much government regulation. 'The winners will be those countries where companies are flexible,' Mr Bhaskaran said. The regional outlook had improved this year as the risks of a collapse of the political system in Indonesia and a disruptive devaluation of the yuan had diminished, he said. 'You have to have a severe devaluation of the yuan of greater than 20 per cent to have a major effect on the region's currencies,' he said.
