20140307-新鸿基金融集团-Investment_Daily_Note_12页_1mb

Investment Daily Note Summary - 7 March 2014

Core Content

• Market Overview: The Hong Kong and U.S. markets showed mixed performance, with the Dow rising 61 points, S&P 500 hitting a new high, and NASDAQ declining slightly. The Hang Seng Index (HSI) rebounded 123 points, closing at 22,702, while the HSCEI rose 10 points. Chinese property and eco-friendly stocks performed well, with the government's policy focus on green initiatives and reduced emphasis on property regulations.

• Key Sectors: The eco-friendly, renewable energy, and strategic emerging industries were in focus, driven by supportive policies. Natural gas and related sectors showed particular promise due to increased applications in public transport and energy projects.

Main Points

1. Stock Highlights

• CIMC Enric (3899.HK):

  • Current price: HK$13.52
  • Target: HK$14.80
  • Stop loss: HK$12.10
  • Positive Factors: Natural gas becoming more popular, growing demand for LNG transportation and storage equipment.
  • Technical Analysis: Stock price broke above 50-day MA with heavy volume, suggesting a strong short-term momentum.

• Lumena (67.HK):

  • Current price: HK$1.49
  • Target: HK$1.70
  • Stop loss: HK$1.36
  • Positive Factors: New materials considered strategic, with PPS resin production, and policy support for environmental protection.
  • Technical Analysis: Price broke above downtrend with heavy volume, indicating potential for short-term gains.

2. Market Movements

• HSI:

  • Closed at 22,702, up 123 points.
  • Market turnover: HK$70.5bn.
  • Bounced back from a low of 22,588 after tracking the Shanghai Composite.

• HSCEI:

  • Closed at 9,672, up 10 points.
  • Capped by 10-day and 20-day moving averages.

3. Economic Data & Events

• U.S. Job Market: Initial jobless claims were lower than expected, but the focus remained on the Ukrainian crisis and non-farm payroll data.
• China's Economic Indicators:
  • Exports rose 7.5% YoY in February.
  • Trade balance improved to $14.50B, up from $31.86B.
  • CPI and PPI data showed mixed performance, with CPI at 2.0% and PPI at -1.9%.

4. Upcoming Earnings Reports

• Major HK-listed companies will release results, with notable forecasts:
  • Hysan Dev (14.HK): Adjusted net profit up 25% YoY to HK$2.03bn.
  • China Overseas (688.HK): Net profit up 5% to HK$21.00.
  • Cathay Pac Air (293.HK): Net profit up 212% YoY to HK$2.86bn.
  • China Coal (1898.HK): Net profit down 50% YoY to HK$4.44bn.
  • Poly Culture (3636.HK): Surged 29% in its trading debut.

5. Market Valuations

• Major Indexes:

  • HSI: FY13E P/E 10.2, below long-term average of 14.1.
  • HSCEI: FY13E P/E 6.5, significantly below long-term average of 13.5.
  • Shanghai Composite: FY13E P/E 8.0, below long-term average of 18.0.
  • S&P 500: FY13E P/E 16.0, above long-term average of 14.5.

• Valuation Trends:

  • HSI and HSCEI are undervalued relative to long-term averages.
  • S&P 500 is slightly overvalued.

Key Information

• Policy Influence: The Chinese government's emphasis on eco-friendly and strategic emerging industries, including new materials and renewable energy, is driving stock performance.
• Commodity Prices: New York crude oil closed at US$101.56/bbl, up US$0.11. Gold closed at US$1,351.80/oz, up US$11.50.
• Market Sentiment: Investors are focusing on individual stocks rather than broad market trends, with eco-friendly and policy-driven sectors showing strong momentum.
• Technical Analysis: Both CIMC Enric and Lumena showed strong technical indicators, breaking above key moving averages and suggesting potential for further gains.

Summary

The investment note highlights the positive momentum in the eco-friendly and strategic emerging industries in Hong Kong and the U.S., driven by supportive policies and increased demand for natural gas and new materials. Key stocks such as CIMC Enric and Lumena are recommended for purchase due to their strong technical performance and positive fundamentals. The Hang Seng Index and HSCEI showed mixed but generally positive movements, while the Shanghai Composite and Shenzhen Composite were up. Upcoming earnings reports suggest varied performance among major HK-listed companies, with some experiencing significant gains and others declines. Market valuations indicate that HSI and HSCEI are undervalued, while the S&P 500 is slightly overvalued. Investors are advised to focus on individual stocks and monitor the impact of policy developments and economic data releases.