20130827-京华山一-Market_Express_China___Hong_Kong_12页_652kb

Hong Kong Market Outlook Summary

Core Content

The Hong Kong market rebounded on the surge in the A-share market and tested the peak of the previous week. The Hang Seng Index (HSI) closed at 22,005.32, up 0.64%, while the Hang Seng China Enterprises Index (HSCEI) closed at 10,075.09, up 1.43%. The market saw a reduction in total turnover to HK$47.35bn. The C&I sub-index and finance sub-index performed the best.

The HSI tested the lower bound of the uptrend started from 25Jun but did not break through, indicating cautious investor sentiment. However, with a stronger A-share market and positive technical indicators, there is potential for further gains along the lower bound of the uptrend.

Key Market Indicators

• HSI (26/08): 22,005.32 (+0.65%)
• HSCEI: 10,075.09 (+1.44%)
• HSCCI: 4,269.83 (+0.15%)
• Market Turnover: HK$47.35bn (-4.72%)
• HSI Volatility Index: 18.52 (+0.04%)
• HSI (Aug): 22,049 (+39)
• HSI (Sep): 21,958 (+33)
• HSI (Dec): 21,879 (-33)
• HSI Net Open Interest: 129,081 (+9,803)

Market Commentary

• The HSI rebounded after the A-share market surged due to positive economic growth expectations in China.
• The index reached a daily peak of 22,116, very close to the previous intraday peak of 22,103.
• The market experienced seesawing above 22,000 due to selling pressure at higher levels.
• The technical indicators for HSI and HSCEI were strong, with RSI values above 50 and the Stochastic Index regaining the D-line.
• The market sentiment improved, but the upward momentum was not strong enough to break the uptrend lower bound.

Tactical Trading Call

• Sihuan Pharm (0460 HK): Buy, Target: HK$5.75, Cut Loss: HK$4.83
• Li & Fung (0494 HK): Buy, Target: HK$13.00, Cut Loss: HK$11.50
• China Overseas (0688 HK): Buy, Target: HK$25.00, Cut Loss: HK$22.40
• Zhongsheng Hldg (0881 HK): Buy, Target: HK$11.75, Cut Loss: HK$9.05

These stocks are expected to rebound and test previous peaks, with strong technical indicators and potential for further gains.

Stock and Sector Commentary

• Chongqing Rural Commercial Bank (3618): Neutral
  • 1H13 net profit increased by 14.8% YoY to RMB3.217bn.
  • NPL balance decreased, but special mention loan balance increased significantly, indicating potential deterioration in loan asset quality.
  • NPL ratio decreased to 0.73%, but the coverage ratio did not improve substantially.
  • The bank's results are in line with expectations, and the overall performance is neutral.

Global Indices

• China Market:
  • CSI 300: 2,335.62 (+2.13%)
  • Shanghai Composite: 2,096.47 (+1.90%)
• Other Markets:
  • Dow Jones Industrial Average (DJI): 14,946.46 (-0.43%)
  • S&P 500: 1,656.78 (-0.40%)
  • Euro Stoxx 50: 2,821.45 (-0.16%)
  • Nikkei 225: 13,636.28 (-0.18%)
  • TWSE: 7,894.97 (+0.28%)

US Market Review

• The US market halted a two-day rebound due to concerns over Syria and a drop in durable goods orders for July.
• All major indices closed near their intraday lows, with the DJIA down 0.43% and the S&P 500 down 0.40%.
• The non-cyclical consumer sector and communication sector performed the worst.
• Trading volume was 21% below the 30-day average, indicating cautious investor sentiment.

Key Economic Data

• 23Aug (Fri):
  • Foreign Direct Investment (CH): 24.10% YoY
  • New Home Sales (US): 394K (-13.40% MoM)
• 26Aug (Mon):
  • Durable Goods Orders (US): -7.30% YoY
  • Durables Ex Transportation (US): -0.60% YoY
• 27Aug (Tue):
  • Consumer Confidence Index (US): 79.00 (+0.01%)
  • Trade Balance (HK): -45.0B
  • Money Supply (HK): M1 YoY: 18.10%, M2 YoY: 9.60%, M3 YoY: 9.70%

REPO

• CPY REPO: A short-term investment pledged by bonds with a rating above BBB.
• 7-day: 1.000%
• 14-day: 1.125%
• 1-month: 1.500%

Valuation and Forecast

• Ka Shui Int'l (822 HK): Maintain Buy

  • 1H13 net profit increased by 69% YoY.
  • Notebook metal cases and plastic smartphone protective cases businesses grew by 113% and 25% YoY.
  • New target price: HK$3.25, implying 19% upside potential.
  • The company is focusing on optimizing production lines and expanding client bases.

• PICC P&C (2328 HK): Maintain Hold

  • 1H13 NPAT increased by 16.8% YoY to RMB7,629mn.
  • Combined ratio remained low at 93.6%.
  • Strong investment returns and improved solvency margin ratio.
  • The company is expected to maintain its performance despite challenges.

Summary of Key Points

• The Hong Kong market rebounded on the A-share market surge and tested the previous peak.
• Technical indicators for HSI and HSCEI were strong, indicating potential for further gains.
• Key sectors like C&I and finance performed well, while utilities remained weak.
• Tactical buy calls were issued for several stocks, with clear target prices and cut loss levels.
• The US market faced pressure due to Syria concerns and weaker-than-expected economic data.
• Ka Shui Int'l and PICC P&C reported strong results, with Ka Shui showing growth in key businesses.
• The REPO product offers higher returns than deposits and is available for bonds rated above BBB.
• Economic data releases showed mixed performance, with some indicators in line with expectations and others below.