Merrill Lynch, the USA investment bank, has reduced its rating on the Hong Kong-listed Chinese brewer, Tsingtao, to "sell" from "buy". The action is attributed to the impact of the SARS virus in the region. Another reason came after Tsingtao's stock had risen by 58% from June to above Merrill's price target for the stock of HK$4.80 a share.

"SARS heightens earnings risk, and we believe consumer stocks with high P/E valuation like Tsingtao are susceptible to a sell-off by the market in the coming months," Merrill Lynch said.

The bank has also reduced its 2003 earnings forecast for Tsingtao by 24% to CNY246m (US$29.7m) against a net profit of CNY223m, which Tsingtao reported in 2002.

07 May, 2003