Industry experts expect energy-related stocks to top the "buy" list for the H-share market this year, as the mainland's robust economic growth is certain to fuel demand for oil and coal.

A man contemplates in front of a stock board in a bourse. Investors are advised to take caution in their market investments this year. AFP

"There is no sign that the domestic demand for oil and coal is slowing down," said Castor Pang, a Sun Hung Kai Financial strategist.

Pang also expects share prices of gold mining companies to rise this year as a result of the weakening US dollar spuring demand for the yellow metal.

Besides energy and gold, telecommunications, transportation and infrastructure shares should also be market darlings for 2008.

Despite concerns over tightening policies on the mainland, Taifook Securities Research Head Marco Mak believes it is a good time to buy into China's commercial banks.

"China's economy will likely cool down this year, as exports to the US are expected to fall," he said, "This will alleviate the pressure on the government to rein in the economy."

Therefore, the odds are slim that the government will come up with more aggressive monetary policies, he added.

China's commercial banks performed poorly on the Hong Kong bourse in recent months, as investors were cautious about further interest rate hikes that will eat into bank's profits.

Since early this year, fears over a possible US recession have sent the Hong Kong stock market on a roller-coaster ride. But according to investment banks, the American economic downturn will actually benefit mainland companies listed in Hong Kong.

According to recent reports released by various financial institutions, analysts predict the H-share index will range from a low of 14,000 points to a high of 22,000 points.

"The accelerating renminbi in the face of the weakening dollar is going to have a positive impact on the H-share index this year," Pang said.

The H-share index closed at 25,833 points yesterday, shedding 194 points, or 1.21 percent.

The US economic downturn will be bad news for the country's export industry.

Analysts agree the sector will probably record little to negative growth this year. Another major loser on the H-share market tipped by analysts, is property stocks, as the central government is expected to unleash a series of measures to rein in the bubbling real-estate market.

"Overall, the market will remain choppy as concerns over a potential US recession lingers on for the first couple of months," Deutsche Bank Chief Economist Michael Spencer said.

However, he is an optimistic that the US is not heading towards a full-blown recession.

"So far, consumption hasn't seen the sharp drop that has been associated with housing recessions," Spencer said.

Therefore, he expects worries over the US economy to clear up in the second half, stabilizing the city's stock market.

(HK Edition 01/14/2008 page1)