Investors fret over market prospects (2)

08:31, December 30, 2010      

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By Lydia Chen | 2010-12-30 | NEWSPAPER EDITION

In 2010, Aviation Precision, a Hubei-based firm engaged in the manufacture of seat adjustment mechanisms, was one of the star performers, surging more than 200 percent so far this year.

Also on Changjiang's list of recommended stocks for 2011 are: Yuan Longping High-Tech Agriculture Co, a leading firm in the agricultural sector; Wangfujing, one of the biggest retailers in China; Huadong Medicine Co; and CITIC Securities.

Rare-earth producers will continue their stunning performance next year because that group of industrial metals is critical to manufacturing everything from iPods to low-emission cars and wind turbines.

Guangdong Rising Nonferrous metal Co, a major producer of rare earths, was another standout on the market this year, with gains of more than 300 percent.

Worst performers

But on the negative side, analysts warned that steel makers such as Angang Steel Co and Hunan Valin Iron and Steel Group Co may extend their losses in 2011 because of declining world prices and overproduction.

Both steel makers were among the worst performers this year, with their stock prices down nearly 50 percent.

Real estate firms, such as Huafa Industrial Co, are also on brokers' lists of stocks to avoid, as the government continues its crackdown on a property bubble and speculators.

One big event awaiting investors in 2011 will be the opening of the long-anticipated international board, which will allow some overseas companies to do yuan-denominated initial public offerings on the Chinese mainland for the first time.

Geng Liang, Shanghai Stock Exchange chairman, said earlier this month that the bourse is generally ready for the launch of the board, though no timetable has been disclosed.

The board will offer an opportunity for Chinese investors to share in the growth of quality foreign companies, according to Yuan Yongmin, an Ernst &Young partner.

However, for individual investors like Xiao, government policies, not foreign IPOs, remain the focus.

Xiao said he will be watching for good investment opportunities in industries such as agriculture, new energy, pharmaceuticals and consumer goods.

"Small company shares, especially those unaffected by inflation, will be most ideal," he said.

However, the Shanghai native said he doesn't plan to pump additional funds into the market in the new year.

"I am cautious about the future, and the effects of all the anti-inflation policies look uncertain," he said. "A wait-and-watch approach is not a bad idea."

Source: Shanghai Daily
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