Morgan Stanley's Research department on Thursday upgraded Hong
Kong stock market view from "cautious" to "in-line" after recent
weeks sharp downwards corrections.
In its research report published here on Thursday, Morgan
Stanley said the benchmark Hang Seng Index has now fallen to
slightly below "our current fair value" and the correction is
"healthy."
Hong Kong stock on Wednesday recorded its worst single-day loss
after Sept. 11, 2001, by diving 1,386.93 points, or 5.4 percent, to
24,450.85 as mounting worries towards a possible recession in the
United States following the subprime mortgage crisis triggered
panic selling.
According to the Morgan Stanley report, the Hang Seng Index has
corrected 22 percent off its peak in 2007 so near-term downside is
limited.
"Going forward, a U.S. recession is not a problem if the local
economy remains resilient, which we believe it will," the report
said.
Private consumption should remain strong in Hong Kong, given the
positive income and wealth effects from a tight labor market and
rising property prices, while the Hong Kong economy has a far
higher correlation with China, where we expect 10 percent growth
this year than with the United States, according to the report.
Morgan Stanley's research team expected in the research report
than Hong Kong's real gross domestic product (GDP) growth of 5.8
percent this year, similar to the investment bank's economics team
's forecast of 5.5 percent.
"Using our 5.8 percent real GDP growth forecast for Hong Kong
and 10 percent in China for 2008," the report said, adding "we
derive an HSI target of 30,000 by the end of 2008, an increase of
22 percent from the current levels."
"We are not getting more aggressive on the HSI market yet
because near-term uncertainty is high, and we would like more
transparency and/or a better entry level before backing up the
truck," it said.
(Xinhua News Agency January 18, 2008)
