[ET Net News Agency, 19 September 2018] Chinese cyclical stocks with exposure to fixed
asset investment saw a broad-based rally yesterday. Chinese construction companies, cement
producers and capital goods manufacturers generally rallied 5-10% on heavy turnover.
HSBC Global Research attributed this to the National Development and Reform Commission
(NDRC) press conference on increasing infrastructure investment.
In addition to speeding up existing infrastructure project execution, the NDRC stated
that the government will accelerate a batch of significant new project tenders to ensure
sustainability of investment.
HSBC believes the recent material improvement in funding availability to local
governments through the issuance of RMB1.35 trillion project-specific bonds should help
Chinese infrastructure investment growth from September onwards.
HSBC said the latest announcement also indicates the investment recovery could last well
into 2019 and beyond. It remains positive on Chinese construction companies and building
material producers. Its key "buys" are China Railway Construction (01186)(TP: HK$13),
China State Construction (03311)(TP: HK$12.7) and Anhui Conch (00914)(TP: HK$62). (KL)