Market Summary
Core Market Indicators
The Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI) showed positive performance over the last three trading days. On 17 November, the HSI closed at 29,199 points, up 180 points, while the HSCEI closed at 11,609 points, up 75 points. The overall market turnover was $119.6 billion.
HSI Performance
- Mkt. Turn. (mn): 119,500 (17 Nov), 113,900 (16 Nov), 115,100 (15 Nov)
- Stock Advances: 689 (17 Nov), 773 (16 Nov), 482 (15 Nov)
- Stock Declines: 986 (17 Nov), 867 (16 Nov), 1,214 (15 Nov)
- HSI Turn. ($bn): 44.24 (17 Nov), 38.30 (16 Nov), 39.99 (15 Nov)
HSCEI Performance
- HSCEI Turn. ($bn): 24.08 (17 Nov), 19.05 (16 Nov), 23.23 (15 Nov)
- HSCEI Turn. (mn): 11,609 (17 Nov), 11,533 (16 Nov), 11,412 (15 Nov)
Technical Analysis
HSI
- The HSI is above the Bollinger Band middle line (28,693 points) and the MACD bullish gap is not narrowing.
- The middle line has been slowly rising since October with no bearish signals observed.
- Resistance Levels: 29,500 (primary), 30,000 (secondary)
- Support Levels: 28,693 (primary), 28,326 (secondary)
- 14-day RSI: 62.86
HSCEI
- 14-day RSI: 53.49
- Primary Resistance: 11,818
- Primary Support: 11,383
HSI Futures
- Nov Contract: Closed at 29,193, with volume of 108,951 and open interests of 144,346
- Dec Contract: Closed at 29,216, with volume of 1,803 and open interests of 27,363
HSCEI Futures
- Nov Contract: Closed at 11,626, with volume of 68,026 and open interests of 218,240
- Dec Contract: Closed at 11,633, with volume of 4,242 and open interests of 72,962
SH Pharma (2607.HK) Acquires Cardinal Malaysia
- SH Pharma acquired 100% equity interest in Cardinal Malaysia for US$557 million (RMB3.69 billion).
- The core assets of Cardinal Malaysia are Cardinal China, which includes 14 direct sale companies and 17 distribution and operation centres.
- Distributor network covers 322 cities and serves nearly 11,000 medical institutions.
- Revenue of Cardinal China in 2017 increased 12.8% YoY to RMB25.5 billion, while net profit after tax decreased 13.8% YoY to RMB131 million.
SH Pharma Financials
- Closed price: HK$19.40
- Expected P/E: 10.9x
- Dividend yield: 2.3%
- 52 week high: HK$23.60
- 52 week low: HK$16.70
- 14-day RSI: 42.63
Sunart Retail (6808.HK) Update
- Alibaba acquired a 36% stake in Sunart Retail at HK$6.50 per share, with total consideration of HK$22.4 billion.
- General Offer at HK$6.50 per share is required for all shareholders.
- 9M Revenue: RMB79 billion (up 2% YoY), Net Profit: RMB2.3 billion (up 14% YoY), but Q3 net profit dropped 6.8% YoY due to gross margin and SSS decline.
- Current valuation: 26x prospective P/E, which is not attractive.
- Recommendation: Investors should not chase the stock, especially if it opens higher.
Sunart Retail Financials
- Closed price: HK$8.60
- Expected P/E: 26.0x
- Dividend yield: 2.1%
- 52 week high: HK$8.88
- 52 week low: HK$5.76
- 14-day RSI: 69.80
Southbound Fund Inflow and Stock Connect Statistics
- SH Connect Balance: RMB15.34 billion (117.98% of quota)
- SZ Connect Balance: RMB12.04 billion (92.58% of quota)
- Combined Southbound Balance: RMB17.23 billion (82.04% of quota)
Top 10 Most Actively Traded Stocks (Southbound)
| Stock Name |
Code |
Buy Trades (RMB) |
Sell Trades (RMB) |
Turnover (RMB) |
| ICBC |
1398 |
895,426,800 |
458,177,343 |
1,353,604,143 |
| TENCENT |
700 |
999,048,420 |
325,986,340 |
1,325,034,760 |
| SMIC |
981 |
252,570,800 |
376,791,588 |
629,362,388 |
| PING AN |
2318 |
270,482,500 |
227,533,850 |
498,016,350 |
| CCB |
939 |
366,116,480 |
20,627,870 |
386,744,350 |
| CPIC |
2601 |
246,227,080 |
82,649,430 |
328,876,510 |
| AIA |
1299 |
3,854,000 |
264,136,420 |
267,990,420 |
| CM BANK |
3968 |
187,760,025 |
55,349,250 |
243,109,275 |
Top 10 Most Actively Traded Stocks (SZ-HK Connect Southbound)
| Stock Name |
Code |
Buy Trades (RMB) |
Sell Trades (RMB) |
Turnover (RMB) |
| TENCENT |
700 |
397,473,640 |
85,542,380 |
483,016,020 |
| SMIC |
981 |
184,814,640 |
156,413,160 |
341,227,800 |
| ZTE |
763 |
95,351,470 |
114,004,380 |
209,355,850 |
| CHINA VANKE |
2202 |
135,530,110 |
7,326,225 |
142,856,335 |
| PING AN |
2318 |
94,695,600 |
38,986,125 |
133,681,725 |
| CM BANK |
3968 |
60,274,225 |
52,316,750 |
112,590,975 |
| NCI |
1336 |
78,137,835 |
29,563,625 |
107,701,460 |
| CHINASOFT INT'L |
354 |
52,006,360 |
42,729,900 |
94,736,260 |
| SUNAC |
1918 |
45,122,250 |
38,800,400 |
83,922,650 |
Ten Most Actively Traded Stocks
| Stock Name |
Code |
Change (%) |
Closed Price |
Turnover (Million) |
| TENCENT |
00700.HK |
+2.96% |
403.40 |
13,853.6 |
| PING AN |
02318.HK |
+1.29% |
78.85 |
5,042.6 |
| ICBC |
01398.HK |
+2.15% |
6.19 |
2,849.4 |
| CCB |
00939.HK |
+1.79% |
6.81 |
2,517.5 |
| AIA |
01299.HK |
+0.92% |
65.90 |
1,813.7 |
| SMIC |
00981.HK |
-3.82% |
11.08 |
1,703.2 |
| CHINA LIFE |
02628.HK |
-0.19% |
26.85 |
1,620.9 |
| HKEX |
00388.HK |
+0.26% |
233.80 |
1,595.5 |
| BANK OF CHINA |
003988.HK |
+0.27% |
3.78 |
1,361.3 |
| YIXIN |
002858.HK |
-3.08% |
7.87 |
1,342.4 |
Ten Short Sell Stocks
| Stock Name |
Code |
Short Sell (HK$) |
Turnover (HK$) |
Short Sell Ratio (%) |
| TENCENT |
00700.HK |
1.85B |
13.85B |
13.36% |
| PING AN |
02318.HK |
1.37B |
5.04B |
27.11% |
| ICBC |
01398.HK |
483.79M |
2.85B |
16.98% |
| CCB |
00939.HK |
463.65M |
2.52B |
18.42% |
| BANK OF CHINA |
003988.HK |
356.86M |
1.36B |
26.22% |
| CHINA LIFE |
02628.HK |
338.62M |
1.62B |
20.89% |
| AIA |
01299.HK |
312.79M |
1.81B |
17.25% |
| CNOOC |
00883.HK |
139.83M |
766.95M |
18.23% |
| PETROCHINA |
00857.HK |
121.89M |
623.67M |
19.54% |
| CHINA UNICOM |
00762.HK |
88.59M |
340.88M |
25.99% |
Economic Calendars
| Date |
Country |
Event |
Survey |
Prior |
| Mon |
H.K. |
Want Want (0151) releases 3Q17 earnings |
|
|
| Tue |
H.K. |
Chow Tai Fook releases 2Q17 earnings |
|
|
| Mon |
U.S. |
Oct. Existing Home Sales |
5.40M |
5.39M |
| Wed |
U.S. |
Fed's Janet Yellen delivers a speech |
|
|
| Wed |
U.S. |
Oct. Durable Goods Orders |
0.3% |
2.0% |
| Wed |
U.S. |
Initial Jobless Claims (Nov. 18) |
|
249K |
| Wed |
U.S. |
Continuing Claims (Nov. 11) |
|
1,860K |
| Thu |
U.S., Japan |
Market closed |
|
|
| Thu |
Eurozone |
Nov. Markit Manufacturing PMI |
58.2 |
58.5 |
| Thu |
U.K. |
3Q GDP (YoY Finalized) |
|
1.5% |
| Thu |
U.S. |
FOMC Meeting Minutes release |
|
|
| Fri |
U.S. |
Nov. Markit Manufacturing PMI |
55.0 |
54.6 |
Key Market Events and Sentiment
- Alibaba's stake in Sunart Retail is expected to provide a short-term boost to the share price, but the valuation is not attractive.
- Mainland banking stocks supported the HSI rally, with several national banks surging 3%.
- Tencent and Ping An broke 52-week highs, with Tencent's price surpassing $400 and Ping An challenging $80.
- Tax reform progress and special counsel's actions against Trump's campaign have influenced investor sentiment.
- China Overseas (0688) reported RMB16.9 billion in property contract sales for October, with GFA of 1.13 million sqm. It adjusted its full-year sales target to RMB231 billion, up 10% from RMB210 billion.
- China Overseas is trading at a 23.6% discount to its NAV (HK$31.2), and its P/B is 0.93x, indicating a defensive play.
- SH Pharma is expected to expand its distribution network to 24 provinces and benefit from M&A activities, with an attractive P/E of 10.9x.
Disclaimer
- KGI Asia Ltd. is an SFC licensed entity.
- The information and opinions are for informational purposes only.
- No liability is accepted for any use of this report.
- The report is not an invitation or offer to buy or sell securities.
