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Technology Stocks : PCW - Pacific Century CyberWorks Limited -- Ignore unavailable to you. Want to Upgrade?

To: ms.smartest.person who wrote (1087)	4/17/2001 2:18:17 AM
From: ms.smartest.person	Read Replies (1) \| Respond to of 2248

Top picks for difficult quarter JON OGDEN Investors should be overweight on Hong Kong's conglomerates and telecommunications stocks in what will turn out to be a "difficult" second quarter, says Indosuez WI Carr Securities. The overweightings, in a quarterly strategy report, are based on key plays Hutchison Whampoa and China Mobile (HK) being oversold during a harrowing year so far for the market. "In our last quarterly we recommended 'Enjoy the ride but wear a seat belt'. We should have recommended a parachute," WI Carr's head of Hong Kong and China research Trevor Cheung wrote. But most of the bad news was already factored into Hutchison and China Mobile's stock prices, clearing the way for a rally. The third of the "three big wigs" in the Hang Seng Index, banking giant HSBC Holdings, might, however, still struggle to find a floor, WI Carr said. It factored in some deterioration in HSBC's United States and Latin American loan portfolio but said its assumption of a stable outlook for HSBC in Europe could prove too optimistic. Overall, the market could end the year higher, helped by interest-rate cuts and a strong Chinese economy benefiting from further outsourcing from the West. However, WI Carr cut its year-end target for the Hang Seng Index from 18,000 points to 15,900 points. Mr Cheung pointed out the dangers of deflation arising from a weak Japanese yen. "At the moment this seems to have obliterated the effects of lower interest rates. The market is reflecting that view," Mr Cheung said. While telecommunications stocks should be overweighted by 5 per cent against the benchmark, WI Carr has a sell on mobile operator SmarTone Telecommunications Holdings and integrated Pacific Century CyberWorks. The house put a HK$2.29 target on CyberWorks, which last closed at $2.75. By contrast, China Mobile was given a target of $52, or 42.46 per cent upside from its $36.50 close on Thursday. "Broadly speaking . . . we are still of the belief that the odds are in favour of China Mobile," Mr Cheung said. "Deregulation is a global trend and lower [tariff] rates are definitely on the way. However, we cannot yet see the prospect of a new player building up to the capacity of [China Mobile] to pose a significant threat in the medium term." After being positive on the property sector for three quarters, Mr Cheung said it was time to go neutral as deflation played tug of war with falling interest rates. "Inflation is still key. Confidence and demand will come with it. Unfortunately, there is no sign of it yet," he said. Despite 150 basis points in rate cuts so far this year, real interest rates were still too high "to make asset investment a compelling option". WI Carr said the "party ended" in banking stocks, which were rated neutral. Improved earnings last year were driven by declining provisions on bad loans. That effect was played out this year, analyst Richard Duncan said. "The full impact of the unprecedented level of competition in the mortgage market will be felt this year," he said. "In 2001 and 2002 the trend in margins will be down across the board." WI Carr put sells on two big favourites - Hong Kong Exchanges and Clearing was given a target price of $10.50 while MTR Corp was given a target of $10.60. For MTR, it said: "We believe the share price is well ahead of fundamentals considering cooler property prospects and its underlying cash flows." -------------------------------------------------------------------------------- SCMP.com is the premier information resource on Greater China. With a click, you will be able to access information on Business, Markets, Technology and Property in the territory. Bookmark SCMP.com for more insightful and timely updates on Hong Kong, China, Asia and the World. Voted the Best Online newspaper outside the US and brought to you by the South China Morning Post, Hong Kong's premier English launguage news source. -------------------------------------------------------------------------------- markets.scmp.com