China’s improving outlook to benefit infrastructure, retail-listed stocks

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China’s improving outlook to benefit infrastructure, retail-listed stocks
Posted: 31 December 2012 1551 hrs

 

 



 
 
 


SINGAPORE: China’s improving economic outlook has boosted analysts’ sentiment towards companies with China exposure.

World Bank recently projected China’s economy growth to hit 8.4 per cent in 2013. In particular, analysts expect certain sectors to benefit from the China growth story — like shopping mall operators and manufacturers of railway related components.

China play stocks are “in” once again — according to equity analysts, who are optimistic of a brighter economic outlook on the Chinese economy in 2013.

Economists agreed that the Chinese economy has probably bottomed in the 3rd quarter of this year, and brokers have highlighted potential beneficiaries to a recovery in the Chinese economy.

Janice Chua, head of research (Singapore) with DBS Vickers Securities, said: “The government will hand out more contracts as they accelerate on fixed asset investments in the coming year. On top of it, urbanisation is a key theme for China and that should also drive contracts and investment.”

Many Hong Kong-listed companies are viewed as proxies to China’s economic growth, but some analysts said several Singapore-listed companies with China exposure could also benefit. After all, Singapore’s direct investment in China topped S$70 billion at the end of 2010, according to the Department of Statistics.

Terence Wong, executive director at DMG Partners Research, said: “With China improving, there will be interest in both Hong Kong and Singapore. It is going to be a rising tide that lifts the boats, both in Hong Kong and as well as in Singapore. I believe that in terms of S-chips, the general investor sentiment is still that of caution because of what had happened in the last few years”

Brokerage firm DBS Vickers has tipped retail mall operators in China like CapitaMalls Asia and Perennial China Retail Trust to benefit from the anticipated increase in domestic consumption as more Chinese cities urbanise.

Meanwhile, the revival of railway projects after a series of high-profile train accidents in China is also a bright spot for industry players.

Both DMG and DBS expect orders for high-speed train parts to flow in for Singapore-listed aluminium train parts supplier Midas. This comes amidst renewed interest in high-speed train travel in China.

Earlier in September, the Chinese government approved 25 urban rail projects that could be worth over US$126 billion.

-CNA/ac

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