Stock picking has become a lost art since the onset of the financial crisis as waves of sentiment have alternatingly lifted all boats and sunk them. But analysts say the dust is starting to settle and now may be the time to start rebuilding your portfolio with an eye towards the future.
Time-tested blue chips are emerging from the scramble and approaching pre-crisis share prices, rewarding selective investors who had the patience to buy and hold amid all the market noise.
Shares in Swire Pacific finished trading on Friday at HK$110, just off their October 2007 high of HK$115.10. Developer Hang Lung Properties closed this week at HK$39.20, topping its 2007 high of HK$39.15, while Li & Fung and Tencent Holdings have each already vaulted above their 2007 peaks.
Developers Cheung Kong (Holdings) and Sun Hung Kai Properties are still trading more than 20 per cent below their highs, but each is on pace to increase in 2010. That will mark Cheung Kong's seventh gain in the past eight years and Sun Hung Kai's sixth.
'We are starting to see more rationality and people are more selective so it has been a battleground this year for stock picking,' said Nicholas Yeo, director and head of equities (China/HK) at Aberdeen International Fund Managers. 'And it will be the same again in 2011.'
Stock picking focuses on fundamentals, seeking companies that can withstand downturns and then outperform the market during recovery periods. Those with a history of paying out dividends are an added bonus.
