Andrew To: lukewarm to prospects of high-debt infrastructure stocks - AASTOCKS.com

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Andrew To: lukewarm to prospects of high-debt infrastructure stocks

2011-12-16 15:37:13

China's Vice Premier Li Keqiang noted that China will commence major projects scheduled in the 12th Five-Year Plan step by step and will specify the focus on construction projects, upholding private investments in railways, municipal, energy, social undertakings, etc.. The news helps boost the share prices of CHINA RAIL CONS (01186) and CHINA RAILWAY (00390).

Andrew To, executive director of Emperor Futures Limited, expressed the government policy will not drive up the stocks drastically. To is lukewarm to the two stocks as China's Ministry of Railway is in debt of up to RMB2 tln and with the high debt, he worries that bad debt may arise in infrastructure stocks; thereby, the stocks are only recommended for short position.

To is optimistic about Chinese banks as the annual profit of mainland banks is expected to increase by over 30% and he is convinced the decline of real estate prices as well as local debt will not affect the mainland banks significantly.

(By an SFC licensed person)

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