Country Focus: Hong Kong
A feature of POWER Shares, our new “Asian Lions” portfolio invests in countries benefitting from strong Chinese growth rather than investing in its high-risk stock market directly.
Shares in Hong Kong have fallen sharply since September last year with a small recovery registered in April.
Lion Capital, the multi award-winning fund manager that manages POWER Shares, Asian Lions, is forecasting GDP growth of 5.8% for Hong Kong in 2008, down slightly on 2007. Lower interest rates and buoyant consumer spending are driving growth.
“Looking forward, we expect the broader domestic demand upturn and reflation process in Hong Kong should continue well in 2008 against the backdrop of a tightening labour market, financial market rally and low interest-rate environment”, says Lion.
Lion is overweight Hong Kong property developers and continues to be invested in countries that are beneficiaries of strong growth in China.
As the table below shows, Hong Kong is one of the higher-priced markets in Asia, on an average forecast PE multiple of 16.9 times 2008 earnings and 14.8 times 2009 earnings – but arguably deserves to trade at a premium given the country’s strong growth.
Hong Kong stocks in the POWER Shares, Asian Lions portfolio include the quality blue chips:
- Hang Seng Bank
- Hopewell Holdings
- Swire Pacific
- CLP Holdings
- Hong Kong Electric
