BNP Paribas Peregrine said Thursday Hong Kong is expected to enjoy seven years of economic feast and the city is now entering the second year.

"Just as Joseph's solution to the problem was to use the stored grain in the granary, Hong Kong's solution is likely to continue to come from Chinese mainland's granary," Raymond Foo, regional strategist of BNP Paribas Peregrine Securities told a news conference.

The mainland's economy is now about 10 times larger than Hong Kong's, and incremental growth of 164 billion US dollars in 2003 is greater than Hong Kong's entire economy.

He noted that with the end of the six-year-long deflation, modest inflation can be expected, and the real GDP growth for Hong Kong this year is estimated at 7.8 percent and 5.1 and 5.8 for 2005 and 2006, respectively.

"Five years from now, Hong Kong's economic border will vanish with the '9+2' Pan-Pearl River Delta Region," he added.

Meanwhile, he said besides the Closer Economic Partnership Arrangement (CEPA), and the Chinese mainland's entry into WTO, the Beijing Olympics games in 2008 and Disneyland will also definitively be good for Hong Kong's economy.

"This is a broad-based economic recovery, and sustainable economic growth will bring about sustainable stock market growth," said Mohan Sigh, head of Hong Kong research of BNP Paribas Peregrine Securities.

"Based on average HSI (Hang Seng Index) constituent stocks' EPS (earnings per share) growth of 4.6 percent, our target of HSI is 15,122 for over a year," he said. Currently, the HSI is trading at about 13,200.

BNP Paribas Peregrine is also bullish on property market, saying that the prices of retail property will surge 25 percent to 30 percent, while the prices of office building will rise 10 percent or 20 percent within a year.

Source: Xinhua