Hong Kong/China Market

Transcription

1 Hong Kong/China Market Technical Strategy Market rumor that the HK-SZ Stock Connect would be launched at the beginning of Jul16 had spurred the SZCOMP Indices Latest Chg. Pts HSI 21, HSI Future 21, DJIA 17, S&P 500 2,092 4 NASDAQ 4,888-8 H-share 9, Red-chip 3, Shanghai Comp 2, Shenzhen Comp 1, Source: Bloomberg, VC Research Although the A-share markets have been dampened by tight liquidity recently, the SZCOMP still trades around the ceiling of its trading range. Hong Kong Market Review Receives support at The HSI opened 75 points on Tuesday but soon resumed its weak trend and declined more than 200 points in the morning session. Trading was primarily at the weak side after lunch break, However, as the SHCOMP reversed course and bounced back 0.61% at close, the HSI strengthened markedly during the last half hour of trading. The benchmark index closed up 102 points to 21407, although turnover volume remained slim at HKD62bn. PAH & CKI buy Husky pipeline business. PAH (006.HK) and CKI (1038.HK) announced today that they have entered into an agreement with Husky Energy Inc., to acquire a 65% stake in a portfolio of Husky s oil pipeline assets in Canada for CAD1.155 bn. The Shares of PAH declined 1.46% to HKD76.6/share as investors concerned about whether the company would distribute special dividends. The deal is scheduled to complete in 3Q16. Media cast doubt on Tianneng s numbers. A mainland media questioned Tianneng s (819.HK) annual result which said that the company turned around and recorded a net profit of Rmb600m for FY15. The same media said that competition in the electric bike battery market intensified in 2015 and it was too good to be true that Tianenng could revert to profitability under this circumstance. Tianneng halted trading after plunging 16% in the morning session yesterday.

2 Economic News U.S. home prices rise less than expected in February. Annualized U.S. single-family home prices rose less than expected in February, a closely watched survey showed on Tuesday. The S&P/Case Shiller composite index of 20 metropolitan areas rose 5.4 percent in February on a year-over-year basis, less than the 5.7 percent increase the month before and just below the 5.5 percent estimate from a Reuters poll of economists. "Home prices continue to rise twice as fast as inflation, but the pace is easing off in the most recent numbers," said David M. Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices. (Reuters) Weak U.S. factory, consumer confidence data cloud growth outlook. Orders for long-lasting U.S. manufactured goods rebounded far less than expected in March as demand for automobiles, computers and electrical goods slumped, suggesting the downturn in the factory sector was far from over. Tuesday's report from the Commerce Department also implied that business spending and economic growth were weak in the first quarter. Prospects for the second quarter darkened after another report showed an ebb in consumer confidence in April. The data came as Federal Reserve officials started a two-day policy meeting. The U.S. central bank is expected to leave its benchmark overnight interest rate unchanged on Wednesday. (Reuters) U.S. workforce growth may give Fed one more reason to go slow on rates. Americans with a high school education or less are returning to the labor force in larger numbers, a trend that points to a broadening of economic growth, but could also keep wage growth subdued and stay the Federal Reserve's hand in its hiking cycle. The Federal Reserve meets this week and is expected to leave rates on hold. One factor it watches is slack in the labor market to see how much room the economy has to grow without triggering inflation. (Reuters) China still wants U.S. bilateral investment treaty: USTR official. High-level Chinese officials have told U.S. trade negotiators in recent days that they still want to reach a bilateral investment treaty with the United States, Deputy U.S. Trade Representative Robert Holleyman said on Tuesday. Holleyman also told a China business conference sponsored by the U.S. Chamber of Commerce that despite reviews of its status under international trade rules, most observers would not view China's economy to be a "market economy." (Reuters) Greece proposes automatic cutbacks in case of fiscal fallout. Greece has offered to automatically cut spending as a contingency plan for further financial aid, using official data as a trigger point if bailout targets are missed, a government official said on Tuesday. Talks between Greece and its international lenders on unlocking a new tranche of aid have snagged over discord on whether present cutbacks are enough for Greece to reach a primary surplus target of 3.5 percent by Indebted Greece, which signed up to a third bailout worth up to 86 billion euros last year, needs creditors from European Union institutions and the International Monetary Fund to sign off on reforms to release a bailout installment exceeding 5 billion euros, needed to pay off maturing ECB and IMF loans in June and July. (Reuters)

3 Bundesbank chief puts question mark over European shield for savers. The head of Germany's Bundesbank has signaled that Germany won't back a common deposit guarantee scheme for euro zone savers, saying that banks' risks are still too entangled with their home countries. Jens Weidmann said the fact that banks still owned many bonds of their home countries meant that any such pan- European shield for savers would mean Germany, as the richest country, would be exposed. (Reuters) Euro zone: more time needed for Greek reforms; Tsipras to seek EU summit. Euro zone finance ministers will not meet on Thursday and need more time to discuss Greek reforms that would unlock new loans, signaling significant differences remain between Athens and its lenders on bailout targets. The meeting was a possibility because Athens and its EU/IMF lenders aimed to reach an agreement this week on reforms needed to conclude a key review of the country's bailout progress that would unlock funds under a multibillion-euro bailout package it signed up to in July. (Reuters)

4 Market News S&P500 index buoyed by commodity sectors; Apple drags futures lower. The S&P 500 stock index ticked up on Tuesday, buoyed by gains in the energy and materials sectors, even though lackluster economic data weakened the U.S. dollar, thereby giving support to oil and gold prices. After the closing bell, however, S&P500 futures pared gains and Nasdaq added to losses following a more than 6.0 percent fall in Apple's shares after the company reported earnings below expectations. Earlier, the U.S. Commerce Department reported U.S. durable goods orders recovered far less than expected in March as demand for cars, computers and appliances slumped, dragging down the U.S. dollar. (Reuters) Oil hits 2016 high after U.S. crude draw report, gasoline rally. Crude oil prices hit 2016 highs on Tuesday on the back of a rally in the gasoline market and after an industry group reported a surprise draw in U.S. crude stockpiles. Brent and U.S. crude's West Texas Intermediate (WTI) futures finished regular trading about 3 percent higher, riding on the coattails of a gasoline rally that hit August highs after a series of refinery hikes. In post-settlement trade, both benchmarks rose more than 4 percent after the American Petroleum Institute reported a drawdown of nearly 1.1 million barrels in U.S. crude inventories last week versus a 2.4 million-barrel build expected by analysts in a Reuters poll. (Reuters) Dollar and yen retreat as central banks loom large. The dollar and yen were on the defensive early on Wednesday, having suffered a broad retreat overnight as investors hunker down ahead of policy decisions by both the Federal Reserve and Bank of Japan. Dollar bulls seem to suspect the Fed will sound dovish again, even though a rise in U.S. Treasury yields to five-week highs suggested other investors were primed for a more hawkish tone. The BOJ, on the other hand, could ease further. That saw the euro outperform. It was back flirting with $1.1300, pulling further away from a trough of $ set earlier in the week. (Reuters) U.S. proposes rule to shrink big banks' liquidity risk. The top U.S. banking regulator on Tuesday released its proposal for establishing a Net Stable Funding Ratio, a final piece in the puzzle to strengthen banks' liquidity in case they come under financial stress. The ratio is intended to ensure liquidity over a one-year horizon, compared with the liquidity coverage ratio of 2014 requiring banks to hold high-quality assets that could be readily converted into cash within 30 days. The ratio will "discourage reliance on more volatile short-term funding," the FDIC said in its proposal. (Reuters) Earnings could mark end to rally in U.S. media stocks. U.S. fund managers' newfound love of media stocks will soon be put to the test. Shares of Time Warner Inc, Twenty-First Century Fox, and CBS Corp are all up by double digits since the start of the year. That rally came in large part because fund managers jumped in after media stocks tumbled on concerns that customers were increasingly opting for webbased television platforms over cable subscriptions, the type of socalled cord-cutting which has weighed on Walt Disney Co's expensive ESPN sports division. (Reuters)

5 Company Announcements Zhuguang Hold (01176) '15 NP $591M, up 228%; no div. Net profit: HK$ M, up % YoY Basic EPS: HK cents Final dividend per share proposed: nil. (Infocast News) Guangnan (Hold) (01203) Q1 NP $9.2M, down 56%; no div. Guangnan (Holdings) Limited (01203) had a net profit of HK$9.192 million for the first quarter of 2016, down 55.9% compared to the previous corresponding period. No dividend is proposed. (Infocast News) BBMG (02009) Q1 net profit RMB151M, up 3%. BBMG Corporation (02009) had a net profit of RMB million for the first quarter of 2016, up 3.01% on year. Basic EPS was RMB0.03. (Infocast News) Huadian Power (01071) Q1 NP RMB1.819B, down 11.29%. Huadian Power International Corporation Limited (01071) had a net profit of RMB1.819 billion for the first quarter of 2016, down 11.29% on year. Basic EPS was RMB (Infocast News) Dalian Port (02880) Q1 net profit RMB123M, up 4%. Dalian Port (PDA) Company Limited (02880) had a net profit of RMB million for the first quarter of 2016, up 4.1% on year. Basic EPS was RMB (Infocast News) Anhui Conch (00914) Q1 NP RMB1.15B, down 32.59%. Anhui Conch Cement Company Limited (00914) had a net profit of RMB1.155 billion for the first quarter of 2016, down 32.59% on year. Basic EPS was RMB (Infocast News) StanChart (02888) Q1 pre-tax profit US$589M, down 59% YoY. Standard Chartered PLC (02888) today releases its interim management statement for the first quarter ended 31 March The group's statutory profit before taxation US$589 million, down 59.2% on year. Underlying profit before tax was US$539 million, down 63.9%. Operating income fell 24.3% to US$3.345 billion. Operating profit before impairment losses and taxation declined 42.9% to US$1.096 billion. (Infocast News) NIRAKU (01245): FY16 net profit significantly lower. NIRAKU GC HOLDINGS, INC. (01245) expects that its consolidated net profit after tax for the year ended 31 March 2016 will be significantly lower compared to that for the year ended 31 March (Infocast News)

6 Today s Sector Focus The mainland press reported that cement prices in Eastern and Northern China grew Rmb10-30/MT during the first week of Apr16, while that in Southern China declined Rmb10/MT during the same period. However, the divergence in price trends does not seem to apply to individual cement shares, which have retreated generally in recent sessions. Chinres Cement (1313.HK) Dipped to touch the floor of its trading trend line. Turnover volume also declined noticeably. An initial support is at the 50-day MA. Source: Bloomberg, VC Research CNBM (3323.HK) Pulled back and close to hit the floor of its upward trading trend. Turnover volume dwindled markedly. The next support is at the 50-day MA. Source: Bloomberg, VC Research

7 Asia Cement CH (743.HK) Trading outlook has weakened after losing the 100-day MA. But HKD1.5/share looks quite firm a support. Source: Bloomberg, VC Research Hang Seng Composite Sectors Sector Index Day (%) Week (%) MTD (%) YTD (%) Hang Seng Index (HSI) 21, Hang Seng Composite 2, HSCI Utilities 6, HSCI Industrial Goods 1, HSCI Materials 4, HSCI Conglomerates 2, HSCI Telecommunication 1, HSCI Property & Construction 2, HSCI Info Technology 6, HSCI Consumer Goods 3, HSCI Financials 3, HSCI Services 3, HSCI Energy 7, HS Mainland 100 6, HS China Enterprises 9, HS China H-Financial 14, HS China Affiliated Corps 3, HS HK 35 2, HS HK Large Cap 1, HS HK MidCap 4, HS HK Small Cap 1, Source: Bloomberg

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