20180828-广发证券_香港_-Dim_Sum_Express_3页_453kb

Dim Sum Express Summary

Key Index Performance

The following table outlines the performance of key global and regional indices as of August 28, 2018:

Hong Kong ADRs

A-Share Market Investment Strategy

Core Content

The A-share market is currently in a phase of policy turnaround, which is expected to precede a market bottom. However, the market remains weak due to the time lag between policy changes and their market impact.

Main Views

• Policy Shift: Policies are beginning to shift from tightening to easing, and there is a divergence in investor views about the policy direction.
• Market Bottom Signals: Two key signals are expected to indicate a market bottom:
  1. The end of share price corrections among leading companies.
  2. The emergence of the effects of policy.
• Sector Performance: The financial sector and infrastructure stocks have outperformed, while the consumer sector may provide excess returns but has seen price declines later in the cycle.
• Investment Recommendations:
  1. Cyclical infrastructure stocks (property, cement, banks).
  2. Growth stocks in the computer sector, which could benefit from improved China-US trade negotiations.
  3. Sectors with reasonable or low valuations relative to overseas peers (retail, F&B).
  4. Investment themes: SOE reform and 5G networks.

Key Information

• The market is expected to benefit from policy easing, similar to previous years.
• The analyst suggests monitoring August social financing data, bond yield spreads, and corporate financing changes to evaluate the impact of policy easing.
• Risks include continued China-US trade tensions, earnings misses, and sharp RMB depreciation.

Agriculture Sector Update

Core Content

African swine fever (ASF) is spreading further in China, with the fourth reported case since the beginning of August, and the first case south of the Yangtze River.

Main Views

• Outbreak Spread: The outbreak has primarily affected small and medium-sized farms.
• Sales Volume Decline: Sales volume in affected provinces (Henan, Jiangsu, Liaoning) has declined in line with the outbreak's intensity.
• Pig Price Impact: Short-term pig prices are expected to face downward pressure due to reduced demand and asset sales at low prices.
• Hog Cycle Turning Point: If the epidemic worsens, the hog cycle turning point may occur earlier than expected, similar to the 2005/06 porcine reproductive and respiratory syndrome (PRRS) outbreak.

Key Information

• Larger farms are expected to be less affected due to better disease control capabilities.
• Risks include price fluctuations, uncertainty in the epidemic's development, and food safety concerns.

Rating Definitions

• Company Ratings:

  • Buy: Expected to outperform the benchmark by more than 15%.
  • Accumulate: Expected to outperform the benchmark by more than 5% but not more than 15%.
  • Hold: Expected relative performance ranges between -5% and 5%.
  • Underperform: Expected to underperform the benchmark by more than 5%.

• Sector Ratings:

  • Positive: Expected to outperform the benchmark by more than 10%.
  • Neutral: Expected relative performance ranges between -10% and 10%.
  • Cautious: Expected to underperform the benchmark by more than 10%.

Disclaimer and Risk Information

• The report is for informational purposes only and does not constitute an offer to buy or sell securities.
• The analyst certifies that the views expressed reflect their personal opinions.
• Risks include China-US trade frictions, earnings misses, and RMB depreciation.
• The report may contain different viewpoints from GF Securities (Hong Kong)’s proprietary trading division.