Stocks News
- Goldman sees stocks peaking mid-2008
Date: 23-Nov-2007 Sources: (Shenzhen Daily)
SHARES listed on the mainland and in Hong Kong may reach their peak in mid-2008, while full-year returns on 300 key mainland large-capitalized stocks were forecast at a negative 11.3 percent for 2008, mainly due to high valuations, Goldman Sachs said.
Stocks of mainland companies listed in Hong Kong, or H shares, were expected, however, to generate a positive return of 8.8 percent next year, the U.S. investment bank said in a research report presented at a media briefing Wednesday.
'We believe euphoric sentiment and liquidity could potentially propel Chinese stocks to unsustainably high levels in the first half of 2008 before they subsequently retrace on growth, margin, inflation and valuations concerns,'it said, citing next summer's planned Olympic Games in Beijing.
The benchmark Shanghai Composite Index has jumped 350 percent since the start of 2006, buoyed by strong economic growth and corporate earnings.
Despite a 14 percent correction since mid-October, the average A-share price-earnings ratio remains above 60 times 2006 earnings, compared with Hong Kong's 22 times, sparking repeated warnings from global investment bankers of a possible bubble.
But Jonathan Anderson, chief Asia economist at UBS, said any major A-share correction should not have much impact on China's economy mainly because of the country's small free float, which gives it one of the smallest equity exposures as a share of gross domestic product in Asia.
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