Liquidity is flowing back to the United States. This is the major trend that we cannot deny. US equity indices will keep outperforming the Hang Seng Index and the Shanghai Composite Index.
How can a fund manager perform on Hong Kong equity funds? Buying traditional high-beta index shares is certainly not the way.
If a fund manager wants to be outstanding, he must hold some new concept shares that can outperform.
DrCheck recommended some in this column. The question is whether you can let the profits run.
I mentioned Biostime International late last year (1112) when it was hovering around HK$18.
The company makes and sells premium pediatric nutritional and baby-care products, and is the beneficiary when mainland mothers do not trust made-in-China baby formula.
But its share price has risen 250 percent to HK$70 level in the past year.
At 43 times historical price-to-earnings ratio, how much of a further upside could there be?
Another example is Beijing Enterprises Water (0371) – involved in water and sewage treatment, and construction of such plants, as well as providing technical services.
The stock has gained 130 percent this year, and now trades at 42 times historical earnings.
Perhaps fund managers holding these two stocks are very confident that the high earnings growth of the companies can be maintained.
Or were the share price rallies just a demand and supply game among the new generation of fund managers who think differently and aim for performance in the relative short term? Dr Check and/or The Standard bear no responsibility for any investment decision made based on the views expressed in this column.