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Hong Kong markets are undervalued, strategist says

Hong Kong’s market is at present undervalued, however conservative traders could wish to keep on the sidelines for now earlier than dipping their toes again in, mentioned Kenny Wen from Everbright Solar Hung Kai.

“If you’re comparatively conservative, I’d say you possibly can take a wait-and-see strategy, particularly for those who’re already holding 40%, 50% shares,” Wen, wealth administration strategist on the agency, advised CNBC’s “Road Indicators Asia” on Wednesday.

He mentioned the market, pushed by sentiment surrounding points resembling debt-ridden developer China Evergrande Group, is “nonetheless extremely unsure.”

To traders who’re “comparatively aggressive,” Wen mentioned: “I do agree now the Hong Kong market is undervalued, so you can begin to construct up your portfolio.”

As of its Wednesday’s shut, the benchmark Hang Seng index in Hong Kong was round 23% decrease than its February excessive. Within the third quarter alone, the index tumbled practically 15% for the interval.

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The funding outlook in Hong Kong stays “extremely unsure” because the inventory market — notably institutional traders — will want time to digest various factors resembling China’s coverage tightening on tech shares in addition to uncertainties surrounding indebted property big Evergrande, Wen mentioned.

For these seeking to purchase “extremely unstable” shares resembling these within the new economic system area, the strategist warned that U.S. Treasury yields have been on the rise and are more likely to weigh on the tech sector. Some examples of latest economic system shares embrace these in expertise, whereas these in sectors resembling utilities are sometimes labeled as previous economic system shares.

“I feel the tech sector will stay pretty unstable,” Wen mentioned, warning traders towards being “too aggressive” on expertise shares within the coming weeks or months.

The benchmark 10-year Treasury yield not too long ago crossed 1.5% and has largely stayed above the extent since. Increased bond yields can hit tech shares — when rates of interest rise, they make the corporate’s future money flows much less useful, and their shares seem overvalued.

The rise in bond yields comes because the U.S. Federal Reserve prepares to scale back bond purchases in the months ahead, normally a precursor to future fee hikes.

https://www.cnbc.com/2021/10/07/investing-hong-kong-markets-are-undervalued-strategist-says.html | Hong Kong markets are undervalued, strategist says

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