20220815-招银国际-China___HK_Market_Weekly_Turnover_dwindled_amidst_uncertainties_9页_1001kb

China / HK Market Weekly Summary

Core Content

This report provides an overview of the performance and outlook of the China and Hong Kong stock markets for the week of 8–12 August, highlighting key market movements, sentiment indicators, earnings updates, and sector-specific insights.

Market Performance

• Indices: The Hang Seng Index (HSI) and CSI 300 Index declined slightly, with the HSI down by -0.1% and the CSI 300 up by +0.8%.
• US Market Outperformance: The Chinese and Hong Kong markets underperformed the US market for the sixth consecutive week.
• Turnover: Hong Kong market turnover reached a three-month low last Friday, indicating reduced investor activity.
• Sector Performance:
  • HSI: Energy & Materials and Telecom sectors gained, driven by rebounding commodity prices and strong interim results.
  • CSI 300: Energy & Materials led gains, while the China Internet ETF (KWEB) recorded five consecutive weeks of outflows.

Sentiment Indicators

• Risk Indicators: The "Fear Index" VHSI fell to a six-month low (23.2), and the short-sell ratio on the HK mainboard dropped to below 17%, suggesting a slight improvement in market sentiment.
• Sector-Specific Sentiment:
  • Short-sell ratio increased in Energy, Utilities, and Industrials.
  • It decreased in IT and Property sectors, indicating reduced selling pressure in these areas.

Earnings & Valuations

• Earnings Consensus: The HSI earnings consensus has been revised up for two weeks in a row, with a 0.3% increase last week, driven by Healthcare, Telecom, and Commodities sectors.
• US Earnings: The US S&P 500 earnings estimates were revised down by 0.2%, and are 1.3% below the peak in early July.
• Valuations:
  • The HSI's forward P/E is 1 standard deviation below the 10-year mean, suggesting undemanding valuations.
  • The CSI 300's forward P/E is above the 10-year mean, indicating potentially overvalued conditions.
  • Many HSCI sectors are still at historical troughs in terms of P/E ratios.

Market Outlook & Sector Views

• Short-Term Outlook: The upside for Chinese and Hong Kong stocks is limited due to ongoing property market risks, resurgence of COVID cases, and China-US tensions.
• Downside Protection: The bottoming out of earnings consensus and undemanding valuations may provide some downside protection.
• Outperforming Sectors: Commodity and Industrial & Technology Hardware stocks are expected to outperform in the short term, supported by positive US payrolls and consumer sentiment.
• Cautious Sectors: Property and Banking sectors remain under caution due to unresolved risks and lack of supportive policies.

Key Events to Watch This Week

• Monday: China's FAI, industrial production, and retail sales (July).
• Wednesday: US FOMC minutes, US retail sales, UK CPI & PPI (July).
• Thursday: Eurozone CPI (July).
• Friday: Results of the quarterly review of the Hang Seng Family of Indexes.
• Earnings Reports: HK & US stocks' earnings reports.

Analyst Certification

• The primary analyst certifies that all views expressed in the report reflect their personal views.
• No compensation is directly or indirectly related to the specific views in the report.
• The analyst confirms no trading activity in the stocks covered in the report within 30 days prior to the report's release and no plans to trade within 3 business days after release.

CMBIGM Ratings

• BUY: Potential return of over 15% over the next 12 months.

• HOLD: Potential return of +15% to -10% over the next 12 months.

• SELL: Potential loss of over 10% over the next 12 months.

• NOT RATED: Not rated by CMBIGM.

• OUTPERFORM: Industry expected to outperform the market benchmark.

• MARKET-PERFORM: Industry expected to perform in line with the market benchmark.

• UNDERPERFORM: Industry expected to underperform the market benchmark.

Disclaimer & Risk Information

• Investment Risks: Investing in securities carries inherent risks, and past performance does not guarantee future results.
• No Individual Advice: This report is not tailored to individual investors and does not consider their specific investment objectives or financial situations.
• No Liability: CMBIGM is not liable for any losses or damages arising from reliance on the report.
• Use of Information: The report is for intended recipients only and cannot be reproduced, reprinted, sold, or published without prior written consent.

Legal & Distribution Information

• United Kingdom: The report is provided only to individuals who fall within Article 19(5) or Article 49(2)(a) to (d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005.
• United States: The report is intended solely for major US institutional investors and is not subject to US regulations.
• Singapore: The report is distributed by CMBI (Singapore) Pte. Limited, an Exempt Financial Adviser, and is subject to Singapore's legal requirements.

Contact Information

• Daniel So, CFA: (852) 3900 0857 | danielso@cmbi.com.hk
• CMB International Global Markets Limited: 45/F, Champion Tower, 3 Garden Road, Hong Kong. Tel: (852) 3900 0888 | Fax: (852) 3900 0800

Conclusion

The report outlines a mixed outlook for the China and Hong Kong markets, with limited upside and potential downside protection. While some sectors like Commodities and Industrial & Technology Hardware show promise, Property and Banking sectors remain under caution. Investors are advised to monitor key events and consult with financial advisors before making any investment decisions.