Investors should start bottom-fishing activities in Hong Kong-listed Chinese stocks as valuations have turned attractive following the market’s recent slide, says a veteran fund manager.
H-share firms, especially those that are likely to benefit from China’s new economic initiatives, deserve a fresh look, according to Diamond Lee of Old Mutual Global Investors.
He pointed out that valuations of some stocks are at their weakest levels since the 1998 Asian financial crisis.
Although one cannot rule out another 10 percent downswing for the market, it may be a good idea for investors to start accumulating some beaten-down counters, the Hong Kong Economic Journal cited Lee as saying.
While H-shares look promising, the fund manager however advises caution on mainland-listed A-shares.
China market risks haven’t dissipated, says Lee, pointing to ham-handed moves made by regulators recently with regard to policy.
As an example, he cited the fiasco early last month when authorities had to backtrack on a circuit-breaker mechanism just four days after implementing the new rule.
There seems to be lack of coordination among different government departments in China, Lee added.
In other comments, Lee urged caution on cement, coal and mining sectors due to overcapacity and other issues on the mainland.
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