Market Outlook - Jan 22, 2001 - 10:08:46 HKT - QuamResearch
It serves little purpose to forecast the movements of the two days leading to the Chinese New Year holiday, not only are prices likely to be influenced largely by quick temporary movements but also many of the market protagonists have already left on holiday.
Our caution after the steep rises of last week, with HSI adding nearly 800 points, but accentuated in the tech and telecoms shares, is that buyers should exercise great caution, and if necessary this provides more of an opportunity to sell rather than an invitation to buy.
It is not just the NASDAQ index now hovering around the 2,800 level, which is our consideration of its maximum for this year, but shares like China Mobile, #941, and Legend, #992, have reached levels at which holders would require more than normal patience to continue to hold them. VTech, #303, a problem share which we had previously suggested as a good share to accumulate ahead of an expected recovery in 2 years time seems to be having more troubles than we had expected. It may be better at this stage to clear the decks, and to wait for more positive indications. Shares like SmarTone, #315, now recovered to $13.70 after $10.40 during this month, would be more a case of squaring of, as it is also beset with competition as well as the probable sale of the British Telecoms holding.
Other popular shares, shares such as Johnson Elec, #179, have also risen to $13 from $10 earlier this month, and even if profits can rise by 15% to 20% for the next 3 years, this share price, valuing the company at $48 billion, still seems very expensive, especially when profits even for the year to 31 March 2002 are expected to be in the region of $1.7, a 30% increase in profits for the year to 31 March 2001.
First Pacific, #142, is likely to roar this week with the euphoria that President Estrada has been ousted from his perch, making way for Gloria Macapagal Arroya. (End)
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