20151124-新鸿基金融集团-INVESTMENT_DAILY_NOTE_13页_2mb

Market Summary

Core Content

• Market Trends: The Hang Seng Index (HSI) and Hang Seng China Enterprises Index (HSCEI) are both showing defensive behavior, holding above their 50-day moving averages. The HSI closed at 22,666 with a -0.4% daily change and a -4.0% year-to-date (YTD) change, while the HSCEI closed at 10,229 with a -0.7% daily change and a -14.6% YTD change. The Shanghai Composite and Shenzhen Composite indices also show mixed performance, with the Shanghai Composite at 3,610 (0.6% daily change, 11.6% YTD) and the Shenzhen Composite at 2,269 (0.8% daily change, 60.3% YTD).

• Market Data: Hong Kong equities experienced a weak performance, with the HSI declining by 180 points and the HSCEI by 72 points. The total turnover dropped to HK$62.2bn. In the U.S. market, trading volumes were thin before the Thanksgiving holiday, with the Dow Jones Industrial Average (DJIA) closing at 17,792 (-0.2%), S&P 500 at 2,087 (-0.1%), and Nasdaq Composite at 5,102 (0.0%). ADRs for Hong Kong stocks fell, effectively putting the HSI down 80 points. The U.S. dollar strengthened, pushing down commodity prices, with crude oil at $41.75/bbl and gold at $1,066.6/oz.

• Stock in Focus: Wanda Commercial-H (3699.HK) is transitioning to an asset-light model and is trading at an attractive price. It is recommended to buy at HK$48 or below with a target of HK$56 and a stop-loss at HK$42. The company is the largest commercial property operator in China and has a FY1 Forward P/E of 10.0x.

• Today's Top Picks:

  • Tianneng Power (819.HK): Expected to rise due to the potential spin-off of its lithium motive battery business on the New Third Board. Target price: HK$7.00, stop-loss: HK$6.10.
  • Ongoing (6899.HK): The share price has risen above the 150-day moving average with increasing turnover, suggesting further upward potential. Target price: HK$6.60, stop-loss: HK$5.00.

Main Points

• Market Volatility: Hong Kong market indices showed significant declines, with the HSI down 88 points and HSCEI down 72 points. Trading volumes were lower than usual, and several stocks, including Guotai Junan (1788.HK) and Huabao Intl (336.HK), saw sharp declines, with Guotai Junan down 12.3% and Huabao Intl down 5.8%.

• Sector Performance: The Technology sector was the best performer with a 2.1% daily gain, followed by Automobile (1.2%), HK Telecoms (0.7%), Toll Road (0.7%), and Environmental and New Energy (0.7%). The REITs sector was the worst performer with a -0.2% daily change, while the Sports Accessories sector showed strong performance with a 7.3% 5-day gain.

• Key Sector Stocks:

  • Technology: Kingdee (268), Chinasoft (354), Tencent (700), NetDragon (777), Kingsoft (3888)
  • Automobile: Geely Auto (175), Dongfeng Motor (489), BRILLIANCE CHI (1114), BYD Co. (1211), Great Wall Motor (2333)
  • HK Telecoms: HutchTel HK (215), Smartone (315), HKT-SS (6823)
  • Toll Road: Sichuan Express (107), Jiangsu Express (177), Shenzhen Express (548), Zhejiang Express (576), An Expressway (995)
  • Environmental and New Energy: China EB Int'l (257), BJ Ent Water (371), China Longyuan (916), Xinyi Solar (968), CGN Power (1816)
  • HK Consumer Group: Sa Sa Int'l (178), Cafe De Coral (341), Luk Fook (590), Bonjour (653), I.T (999)
  • Dairy: Biostime (1112), CH Modern (1117), YST Dairy (1431), Mengniu (2319), Huishan Dairy (6863)
  • Local Banks: Hang Seng Bank (11), BEA (23), Chong Hing Bank (1111), BOCHK (2388), Dah Sing Banking (2356)

• Valuation Analysis: The Hang Seng Index (HSI) has a FY1 P/E of 11.4, close to its long-term average of 11.3. The HSCEI has a FY1 P/E of 7.7, which is below its long-term average of 8.5. The Shanghai Composite has a FY1 P/E of 15.5, significantly higher than its long-term average of 11.0. The S&P 500 has a FY1 P/E of 17.6, higher than its long-term average of 14.7.

• Interest Rates and Exchange Rates: The U.S. 2-year Treasury yield was at 0.9422%, up 9.11 bps in the last 5 days. The U.S. dollar index was at 99.8030, showing a 0.4% daily gain. The USD/HKD rate remained stable at 7.7501, with a 0.0% change. The EUR/USD rate was at 1.0634, down 0.1% daily.

• Precious Metals and Commodities: Commodity prices fell due to the stronger U.S. dollar. New York crude oil futures closed at $41.75/bbl, down $0.15. New York gold futures settled at $1,066.6/oz, down $9.7. The CRB Index was at 183.4, down 1.1% daily.

• A-Share Premium to H-Share: The A-share premium to H-share for several companies was noted. For example, the A-share premium for China Shipping-H (1138.HK) was 144.7%, while for Ping An-H (2318.HK) it was -4.9%.

Key Information

• Market Highlights:

  • Cheung Kong Infrastructure (1038.HK) and Power Assets (6.HK) are suspended pending a merger vote. Advisory firms ISS and Glass Lewis are recommending against the merger, which may affect the share prices.
  • Hong Kong retail figures for September were poor, with a decline in luxury spending. Retailers like Chow Tai Fook (1929.HK) and Sa Sa (178.HK) are expected to report results that may be worse than expected.
  • The Shanghai and Shenzhen stock exchanges increased margin requirements to 100%, which impacted brokerage stocks. CITIC Securities (6030.HK) and Haitong Securities (6837.HK) dropped 1.7% and 4%, respectively. Guotai Junan International (1788.HK) dropped 12.3% due to its chairman's disappearance.
  • Macau gaming stocks continued to decline, with Galaxy Entertainment (27.HK), Wynn Macau (1128.HK), and Sands China (1928.HK) down 4%, 3.8%, and 3.3%, respectively.

• Economic Data and Event Calendar:

  • Companies like Tianneng Power (819.HK) and Ongoing (6899.HK) are expected to release interim results, which may impact their share prices.
  • The HSCI volume filter and most short sold stocks are listed, with Guotai Junan (1788.HK) and HI Sun Technology (818.HK) showing significant volume increases.

• Top 20 Most Traded ETFs:

  • The most traded ETFs include the Tracker Fund HK (2800), HS H-Share ETF-H (2828), and others. Their prices and daily changes are listed, showing mixed performance.

This summary provides an overview of the current market conditions, key stock movements, sector performance, and valuation metrics for the Hong Kong and broader markets.