Hutchison Telecommunications Hong Kong Holdings Ltd (215.HK), which has been going through some speculation recently, announced a 10-percent drop in interim net profit.
Its share price fell after the announcement, which gives investors (who’d like a gamble) an additional opportunity to buy low.
The reason why Hutchison Telecommunications recently became a target of speculation was not actually because of its results forecast, but the news that it might be selling its assets.
Chances are that Li Ka-shing might even sell Hutchison Telecommunications altogether. Such a speculation has been present in the market for quite some time, and it is neither confirmed nor denied.
When that happens, the company’s share price rose repeatedly, which is similar to the case of Orient Overseas International Ltd (316.HK), whose share price was repeatedly driven up from last year till this date by rumours of sell order.
Do not keep switching stocks
The Hang Seng Index is on a good uptrend, repeatedly hitting new two-year highs. On the other hand, several strong stocks faced headwinds a month ago and has since failed to reach new highs.
Many investors are getting impatient after waiting for over a month, and I frequently get questions such as “should I switch to stocks that are currently experiencing a rally?”
Here’s my answer: I don’t think this is a good strategy.
In my opinion, chasing and switching to the newest strong stocks is not a reliable strategy, as strong stocks that had repeatedly reached record highs over the past six months could take off again any time after a temporary break.
By switching stocks repeatedly, chances are that the stocks you hold might rise in prices as soon as you’ve sold them. Therefore, I think a better strategy is to hold on firmly to the old strong stocks that you own.
It’s fine to chase new strong stocks if you have extra money in hand, but if you don’t, I wouldn’t recommend abandoning the old for the new.
I am confident that the older strong stocks would experience a rally again after the new strong stocks have had their turn.
Considering that the older strong stocks had reached historical highs at an earlier stage, I believe that they are actually stronger than the new stocks, whose share prices could be simply driven up as their sector(s) have become “hot” from speculation.
But again, sectors and concepts take turns to go through speculation.
Dalian Wanda scraps bid for Bandar Malaysia?
According to the news, Dalian Wanda Group has abandoned its bid for the property portion of the Kuala Lumpur-Singapore high-speed rail project. The project is the biggest of its kind in Malaysia and has attracted investments from all over the world.
If Dalian Wanda were to really scrap its bid, it probably implies that the Chinese Central Government is controlling the foreign investment of private enterprises, and the larger the enterprise, the stricter the control.
Perhaps, from now on, only state-owned enterprises would be allowed to invest overseas. That is a big deviation from China’s “Go Out policy”, which encourages outward foreign investment. When capital outflow is restricted for private enterprises, the value of the Yuan may rise as a result.
This article was translated from Chinese to English by Chen Xushuang. Click here to read the original article.