Hong Kong-listed Chinese stocks are poised for revaluation as investors continue to narrow the discount to their A shares, the Hong Kong Economic Journal reported Tuesday.
Fan Kwan-ming, managing director of research of GF Securities (Hong Kong) Brokerage Ltd., said revaluation is likely when the long-awaited mechanism for mutual recognition of funds comes on stream and Hong Kong begins cross-border stock trading with Shenzhen in the second half.
This is a good time to buy quality stocks in Hong Kong when the A-share discount is still significant, especially on ChiNext, the Shenzhen growth enterprise board, Fan said.
Sectors such as environmental protection, new energy, technology, media and telecommunications are among the broker’s top picks.
Meanwhile, shares of mainland insurers, banks and brokerages are expected benefit from looser policies, including cuts in interest rates and banks’ reserve requirement ratio.
Ou Yafei, research head in the mainland of GF Securities Co. Ltd. (01776.HK), said the upcoming Shenzhen-Hong Kong Stock Connect will be the biggest catalyst for the stock market.
Small and medium-sized constituents of the Hang Seng sub-index are likely to qualify for the stock link, Ou said.
Translation by Vey Wong
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