CIMB Investment Recommends H-Shares, HSBC, Goldman Sachs And JP Morgan

On Business Times: CIMB Investment upbeat on China stocks

• Global stocks may start to rebound towards year-end and investors should begin nibbling on China's H-shares to ride the recovery, CIMB Investment Bank Bhd said.
  
  "It's a matter of liquidity right now. Once the liquidity comes back to the market, I believe the H-shares will be the first to benefit," Carolyn Leng, the co-head of CIMB Private Banking, said.
  
  "A rebound is likely towards the end of the year, from the technical standpoint. Our first priority is the H-shares and Hong Kong, followed by Singapore to a lesser extent."
  
  However, she is less certain of a domestic stock rally anytime soon.
  
  "If we can get through June or July, we will be okay. That's when corporates are reporting the numbers for May, and the country will see the leadership transition. People will look for some kind of stability," Leng said of Malaysia. "But I suspect that these two months will be very trying times for us."
  
  All eyes will be on the cash flow of companies, whether they have enough funds to pull through the next two years in crisis, since banks are tightfisted. Companies that are highly leveraged will be closely watched too, Leng said.
  
  She is convinced that China's massive stimulus plan will be successfully executed and thus driving the recovery in stocks, particularly the H-shares, or China firms listed in foreign markets.
  
  Investors, who have been staying on the sidelines as the economic crisis continues to play out, are sitting on piles of cash just waiting for the right opportunity to go back into the stock markets, she said.
  
  "We see a switch in mentality from our clients. About eight months ago they were only interested in fixed deposits for six or nine months. Today, they are asking for one month."
  
  "Investors were edgy and short on stocks, which means that they are ready to go back to the market at any time. It's just a matter of getting a bit of clarity," said Leng, who helps manage RM3.9 billion at the CIMB unit that caters to high net worth clients.
  
  In Hong Kong, she said, investors may look at battered financial stocks like HSBC, and shares of infrastructure companies.
  
  For longer term investors who can hold for over five years, she recommends the US market and even the financial stocks there which are considered highly risky now.
  
  "You've got to really look. Like Goldman Sachs ... I strongly believe in the company's strength, its management, and the kind of core business it has been doing," Leng said.
  
  US bank Goldman Sachs' strong corporate finance team will benefit from a future merger and acquisitions boom in the US as industries consolidate, she pointed out.
  
  JP Morgan, another solid US institution, is also worth considering, she added.