Frederick Ma Si-hang, a former secretary for commerce and economic development, expects the rally in the city’s stock market to continue for at least a further six months, the Hong Kong Economic Journal reported Tuesday.
The financial guru, who was a securities analyst in the 1970s, said three factors are supporting the market in its climb.
First, Hong Kong stocks are still undervalued in terms of price-to-earnings ratio, Ma said.
Extremely low interest rates and the herd mentality of investors are the two other factors that will continue to push the stock market higher, he said.
Ma said the restructured CK Hutchison Holdings Ltd. (00001.HK) and Chinese banks and property plays are his top picks for the moment.
Li Ka-shing’s conglomerate has been forging close ties these years with the British Conservative Party, which has just won the country’s general election, resulting in David Cameron’s second five-year term as prime minister, Ma said.
However, he holds a cautious view on Hong Kong Exchanges and Clearing Ltd. (00388.HK) given its overvaluation in terms of its P/E ratio.
The multiple has already factored in the stock’s prospects, and its share price could easily be affected by virtually any negative sign that emerges amid a climate of overexpectation, he said.
Ma said he has never lost a penny in the stock market over the past 30 years, with a mild annual gain of 8-10 percent on average.
Translation by Vey Wong
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