Sunday, June 26, 2022
 
Columnist
Martin Hennecke

New blue chips may see short-term rally
 
23/05/2022
 
<p>Four new blue chips, including Semiconductor Manufacturing International Corporation (0981) and Orient Overseas (International) (0316), may see a short-term rise in prices, as their inclusion in Hong Kong&#39;s benchmark Hang Seng Index was a bit unexpected, analysts said.</p><p>However, they also warned investors not to lose focus of the firms&#39; fundamentals amid economic uncertainty.</p><p>Aluminium giant China Hongqiao Group (1378) and car dealer Zhongsheng Group (0881) will also be added to the Hang Seng Index, effective June 13.</p><p>By adding these four new stocks, the city&#39;s benchmark will have a total of 69 constituents from the current 66 but still missing its earlier goal to expand the index to 80 firms by mid-2022.</p><p>Apart from SMIC, the inclusion of other three stocks came a bit of a surprise and this may prompt their prices to rise in the short term, said Kenny Ng Lai-yin, a strategist at Everbright Securities International.</p><p>In the long term, however, four companies have different fundamentals and stocks prices may vary, Ng noted, adding that SMIC and Zhongsheng are his picks due to the strong demand for chips and high-end cars.</p><p>Meanwhile, Francis Kwok Sze-Chi, the vice chairman of the Hong Kong Institute of Financial Analysts and Professional Commentators, said being added to HSI does not necessarily mean an upward trend in stock prices according to past experiences, suggesting that investors should keep an eye on the companies&#39; financial performances and be more cautious amid economic uncertainty.</p><p>Ng expects that the benchmark HSI will hi the 21,000-level mark this week, with Chinese regulators continuing to roll out policies to boost the economy.</p><p>Chinese banks cut the five-year loan prime rate by a record of 0.15 percentage points last Friday as regulators sought to revive the ailing housing sector.</p>

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