Posts tagged ‘POWER ASSETS 電能實業 (00006.HK)’

Olympus Has FallenA lot of fear in the markets with the recent news on possible outbreak of Avian Flu and intense situation in North Korea.  Mind you, the recent movie “Olympus Has Fallen” describes a possible scenario which North Korea may pursue.  Of course, the movie has a lot of areas that is quite unreasonable, but for an action packed movie, it does its job!

With all this fear in the markets after seeing the drop of 600+ points in the HSI last Friday, it maybe time for some low beta stocks!

Even with the stock picking skills, it is much much harder to outperform during down trending markets.  You can sow the seeds of future success, but you need to be patient.  Perhaps when markets turn upwards, it may be time for high beta stocks then!

Stock Last C. Price Adjusted Beta
HK2 66.95 0.38
HK3 22.4 0.66
HK6 73.35 0.37

If you have formed an idea of a price you would like to buy for example, setting a limit order is often wise but requires much much more patience.

Picture from the below link:

– Mr. Alpha

During times of high market volatility, investors may typically ask, “what kind of strategy should I follow?” or “which stocks should I be buying and selling”?  Using the concept of statistical regression between individual stock and market returns, we can begin thinking about these questions using the concept of “Beta” from the Capital Asset Pricing Model (CAPM).

Beta is a measure of the sensitivity of individual stock returns to market returns.  A stock like HK2800 (Tracker Fund) would have a beta close to 1.  A Beta significantly higher than 1 indicates that a stock may rise or fall more sharply than the market index.  A Beta significantly less than 1 indicates that the individual stock returns do not move in the same direction as how the market moves.


Top 5 High Beta stocks:

Stocks Beta
中國智能交通 CHINA ITS (01900.HK) 3.67
華耐控股 SINOREF HLDGS (01020.HK) 2.58
卡姆丹克太陽能 COMTEC SOLAR (00712.HK) 2.6
珠江鋼管 CHU KONG PIPE (01938.HK) 2.52
旭光高新材料 LUMENA NEWMAT (00067.HK) 2.5


For high Beta stocks, if an investor had a view that the market is trending upwards in the short term, buying high beta stocks may lead to higher gains.  But under the current highly volatile environment, investors may be better off simply to avoid high beta exposure, as these are the names that may drop more significantly than the market.  What is also notable is that in the high beta list, China property developers tend to show up further down the list of top 50 high beta names.


Top 5 Low Beta stocks:

Stocks Beta
中電控股 CLP HOLDINGS (00002.HK) 0.1
電能實業 POWER ASSETS (00006.HK) 0.12
領匯房產基金 LINK REIT (00823.HK) 0.21
長江基建集團 CKI HOLDINGS (01038.HK) 0.22
和記電訊香港 HUTCHTEL HK (00215.HK) 0.24


Under the current highly volatile environment, investors may be better off to have low Beta exposure as a cornerstone security to build a defensive portfolio.  As always, comments and feedback are welcome!


Mr. Alpha