BlackRock is advising investors to look out for buying opportunities in the year’s second half after sell-offs in emerging markets prompted by fears of interest rate hikes by the United States.
Andrew Swan, managing director and head of Asian fundamental equities at the world’s largest asset management firm, however, warned of a bubble in the A-share market, which has soared 150 percent over the past year.
Swan said BlackRock began to increase its weighting in A shares in July last year but started offloading them from the end of last year.
The firm never invests in stocks with 80 to 100 times price-to-earnings multiples, he said.
The P/E ratios of some small-cap A shares have reached 100 times, indicating they are overbought.
The stocks BlackRock sold include financial plays that are supposed to benefit from interest rate cuts in mainland China. It also disposed of internet and healthcare shares.
However, as more capital inflows are expected to enter Hong Kong through the soon-to-be-launched stock link with Shenzhen, Swan said, the H-share market could rise further.
Translation by Vey Wong
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