Goldman Sachs Raises H-Share Rating to ‘Outperform,’ Sets Target for Hang Seng Index at 25,200



(Yicai Global) March 29 -- Goldman Sachs Group [NYSE:GS] raised its H-share rating to ‘Outperform’ after downgrading its raiding late last year. Multinational financial institutions including BlackRock Inc.’s and JPMorgan Chase & Co. have been increasingly optimistic about Hong Kong-listed mainland Chinese companies.

The performance of H-shares will be supported by better-than-expected trade, credit and purchasing managers index (PMI) data in the mainland this year, the New York-based investment firm said. Some USD54 billion will flow from the mainland into the Hong Kong stock market through schemes connecting the Hong Kong and mainland markets this year, reported yesterday.

It is a suitable time to buy shares, said Goldman Sachs, who is bullish about H-shares in the next three to six months. The target for Hang Seng Index was set at 25,200 points.

The short-term downturn in the H-share market that started in March will come to an end, and H-shares will be the top choice for aggressive asset allocations in the next couple of years, said Yu Hao, manager of GF Shanghai and Hong Kong Shenzhen New Opportunities Fund -- one of the best performing funds in China this year.

As of last weekend, a total of CNY65.3 billion (USD9.5 billion) has made its way from the mainland into the H-share market, and the total volume of transactions conducted through the stock connect mechanisms was worth to CNY279.6 billion (USD40.5 billion), accounting for 7.5 percent of the Hong Kong’s main board’s total turnover, statistics show. The mainland’s contributions to the value of trades on the stock connecting systems is expected to proportionally increase.

Driven by strong economic data and a substantial inflow of investment funds, the Hang Seng Index has risen 10.5 percent so far this year, the highest among such indices worldwide. The index has experienced pullbacks as large as 3 percent and peaked on Feb. 23.

The index closed at 24,345.870 yesterday, up 0.63 percent.

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