According to the report released by HSBC Global Research, the investment growth rate in infrastructure related to electrical utilities slowed down to 18% in May. Manufacturing investment grew 9%, representing stable performance. Traditional infrastructure investment increased by 5%, showing a slight slowdown, but the bank believes that the accelerated issuance of special bonds by local and central governments in the near future will support the stable growth of infrastructure investment. The new construction area of real estate continued to remain low, with a decrease of 23%.
Looking ahead to the second half of the year, the report indicates that catalysts will include policy implementation, demand recovery, and improvement of profit margins.
In terms of individual stocks, preference is given to Times Electric (03898.HK), Haitian International (01882.HK), Techtronic Ind (00669.HK), and Quanfeng Holdings (02285.HK) which are expected to benefit from demand growth, as well as to China Hongqiao (01378.HK) and Weichai Power (02338.HK) which are expected to improve their profit margins. Defensive China Jian (03311.HK) is also favored.