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Cement and copper

Richard Wong, manager of the HSBC GIF Chinese Equity, on developments in China and the expected five-year plan

will benefit from government investment in housing and infrastructure in the near future commodity sectors such as cement or copper mines, says Richard Wong, manager of the HSBC GIF Chinese Equity, in a current market outlook.
“A key goal of the Chinese government is to provide affordable housing for low-income families. Therefore, China plans to build this year, up to 5.8 million homes, in addition to the two million last year. Of the project will benefit many sectors, for examples of cement, steel and copper. Due to high demand, Wong has overweighted the cement sector. The current supply is reduced further by the closure of some small, polluting factories. The supply of copper is the world’s limited while demand is growing strongly. Wong this sector has also overweight. For steel, however, remains the manager reserved, as it currently is an oversupply and higher iron ore prices could reduce profit margins of steel producers.

Beijing will soon announce the twelfth five-year plan. The Plan covers the years 2011 to 2015. The HSBC fund manager has information that the new five-year plan will place an emphasis on improving and expanding infrastructure. Although the details have not yet known, Wong expects that the plan will include the following: to promote greater energy efficiency, reducing pollution, increasing the share of consumption in gross domestic product, to increase the income and the reduction of income disparities between urban and rural population. ”
To curb speculation in the Chinese real estate market, it is enough, according to Wong is not only to restrict the supply of mortgages and loans. “There are many rich Chinese. In fact, about 30 percent of house purchases in the People’s Republic made completely through cash payment.” Therefore, it is more effective in Wong’s assessment, to limit the number of allowed real estate purchases per capita.