Eye On Small-Cap Firms
By Lydia Chen |
January 13, 2011, Thursday
|
Print Edition
Print Edition
INVESTORS who are thinking about a long-term investment in the stock market should stay away from market heavyweights, said Steven Sun, head of China equity strategy at HSBC.
Sun said instead that investors should pay attention to small capitalized firms which he believed would extend their rise this year.
He also believed that the People's Bank of China, the central bank, is likely to increase borrowing costs by another three times this year. ''The first one (rise) will probably occur soon after the Spring Festival,'' Sun predicted.
Rising borrowing costs will hurt companies' profits as they rely heavily on loans to expand their business.
Sun also sees tight liquidity this year which will hurt companies' profits. He predicted China's M2, the broadcast measure of money supply, to rise by up to 16 percent, a drop from last year's 20 percent.
Sun said instead that investors should pay attention to small capitalized firms which he believed would extend their rise this year.
He also believed that the People's Bank of China, the central bank, is likely to increase borrowing costs by another three times this year. ''The first one (rise) will probably occur soon after the Spring Festival,'' Sun predicted.
Rising borrowing costs will hurt companies' profits as they rely heavily on loans to expand their business.
Sun also sees tight liquidity this year which will hurt companies' profits. He predicted China's M2, the broadcast measure of money supply, to rise by up to 16 percent, a drop from last year's 20 percent.
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