Hong Kong’s market is presently underestimated, however conservative financiers might wish to remain on the sidelines in the meantime prior to dipping their toes back in, stated Kenny Wen from Everbright Sun Hung Kai.
“If you are relatively conservative, I would say you can take a wait-and-see approach, especially if you’re already holding 40%, 50% stocks,” Wen, wealth management strategist at the company, informed CNBC’s “Street Signs Asia” on Wednesday.
He stated the marketplace, driven by belief surrounding concerns such as debt-ridden designer China Evergrande Group, is “still highly uncertain.”
To financiers who are “relatively aggressive,” Wen stated: “I do agree now the Hong Kong market is undervalued, so you can start to build up your portfolio.”
As of its Wednesday’s close, the criteria Hang Seng index in Hong Kong was around 23% lower than its February high. In the 3rd quarter alone, the index toppled almost 15% for the duration.
The financial investment outlook in Hong Kong stays “highly uncertain” as the stock exchange– especially institutional financiers– will require time to absorb various aspects such as China’s policy tightening up on tech stocks along with unpredictabilities surrounding indebted residential or commercial property giant Evergrande, Wen stated.
For those aiming to purchase “highly volatile” stocks such as those in the brand-new economy area, the strategist alerted that U.S. Treasury yields have actually been on the increase and are most likely to weigh on the tech sector. Some examples of brand-new economy stocks consist of those in innovation, while those in sectors such as energies are usually categorized as old economy shares.
“I think the tech sector will remain fairly volatile,” Wen stated, alerting financiers versus being “too aggressive” on innovation shares in the coming weeks or months.
The criteria 10- year Treasury yield just recently crossed 1.5% and has actually mostly remained above the level given that. Higher bond yields can strike tech stocks– when rates of interest increase, they make the business’s future money streams less important, and their shares appear miscalculated.
The increase in bond yields comes as the U.S. Federal Reserve prepares to downsize bond purchases in the months ahead, typically a precursor to future rate walkings.