Slowing Resources ??

[HollandPark]

From Bloomberg -

 

Equity Strategists: Avoid Asian Technology and Materials Stocks, HSBC Says Investors should avoid shares of Asian technology and raw-materials companies because a slowing U.S. economy may dent demand for their products, according to HSBC Holdings Plc's Garry Evans.

 

"Equity Strategists: Avoid Asian Technology Shares, HSBC Says

 

By Darren Boey and Bernard Lo

 

Sept. 6 (Bloomberg) -- Investors should avoid shares of Asian technology and raw-materials companies because a slowing U.S. economy may dent demand for their products, according to HSBC Holdings Plc's Garry Evans.

 

Hong Kong-based Evans, Asian equities strategist at HSBC, is instead recommending holding shares such as Asian supermarket operators that aren't exposed to export sales, he said in an Aug. 31 interview without naming specific stocks.

 

``Domestic demand in Asian countries, especially China and India, is more robust than before, and Japan as well,'' said Evans, 45. ``The problem is that the correlation between economic growth and exports, or between the markets and exports, for all these countries is very high.''

 

. . .

 

Commodities prices also appear to be declining, threatening profits at companies such as China's Aluminum Corp., the world's second-biggest alumina producer, and Australia's BHP Billiton, the world's largest mining company.

 

Copper in New York slid 3.2 percent in August, while oil futures lost 5.6 percent. An index of six metals including copper and aluminum on the London Metal Exchange dropped 0.4 percent.

 

``We are quite concerned that we are approaching the end of the cycle for a lot of the metals,'' said Geoff Lewis, Hong Kong- based head of investment services at JF Asset Management Ltd., which has $77 billion of assets in Asia. ``There has been quite a lot of speculative demand'' that has driven commodities prices higher in recent months.

 

JF Asset Management holds fewer shares of resources companies than are represented on stock benchmarks.

 

Worst Performer

 

Shares of Aluminum Corp., known as Chalco, have slumped 36 percent in the past six months, making it the worst-performing materials stock on MSCI's Asia-Pacific index. The company last week cut the price of alumina, the raw material used to make aluminum, for the second time in four weeks.

 

Melbourne-based BHP last month posted a second-half profit increase of 77 percent from a year earlier, less than some analysts surveyed by Bloomberg News estimated. The company also indicated its sales growth in China may slow. "

 

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