THE Hang Seng Index should pass the 16,000 mark this year as low worldwide interest rates draw overseas investors to the Hong Kong market, says a US-based investment adviser.
Maria Ramirez, president and chief executive of Maria Fiorini Ramirez Inc (MFR), said a lack of high-yielding investments in the US was leading investors to seek higher returns through emerging market mutual funds, and Hong Kong was one of the favoured markets.
Ms Ramirez said: ''There is a positive attitude towards the Hong Kong market among US investors, with the so-called China plays driving the market.'' She likened the Hong Kong market to Tokyo, predicting that price-earnings multiples could go higher than 20.
''I think that the earnings growth in the short term may not justify the stock prices, but over time the expectations will be fulfilled,'' Ms Ramirez said.
She said Hong Kong was a main conduit for those wanting to invest in Asia and would continue to attract cash. She said mutual funds now being created in the US were targeted at small investors rather than institutions.
''In the months ahead the market will be driven more by the man in the street who reads about emerging markets and the high returns available,'' Ms Ramirez said.
''There are still many emerging market mutual funds with excess cash and a need to buy shares, which will force the markets up and up.'' On the outlook for the Hang Seng Index, Ms Ramirez said: ''It is very reasonable to expect an increase of at least 30 per cent this year.'' She also predicted that the market would experience a ''nice bounce'' after the Lunar New Year.
Ms Ramirez predicted that interest rates and inflation would continue to be low and world growth rates would increase.
'' A combination of lower inflation and lower interest rates in the industrialised countries will create an environment of lower real long-term rates,'' she said.
'' The search for higher rates of return will accelerate the growth of globalised portfolio management, with emerging market funds getting the lion's share of allocations.''
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