Hong Kong/China Market

Transcription

1 Hong Kong/China Market Technical Strategy The SHCOMP rose three days in a row with increased turnover volume Indices Latest Chg. Pts HSI 28, HSI Future 28, DJIA 25, S&P 500 2, NASDAQ 7,841-1 H-share 10, Red-chip 4, Shanghai Comp 2, Shenzhen Comp 1, Retaking the 10-day MA improves its trading outlook. The next resistance lies at 2964 points, or the 50-day MA. Hong Kong Market Review Meaningful rebound. Beijing s stance of adopting more accommodative fiscal policies instead of the deleveraging campaign has spurred investment sentiment towards the local and mainland stock markets. The HSI opened 26 points higher but quickly extended gains to as most as 461 points with the help of mainland financials. Rising momentum sustained after the lunch break and the index closed up 406 points to Turnover stood at HKD108.3bn. Mainland banks shine. The fiscal stimulus could potentially boost the economic activities which is expected to benefit the lenders. CCB (0939.HK) advanced 3.18% to HKD7.14/share while ICBC jumped 3.37% to HKD5.82/share. ABC (1288.HK) also nudged up 3.24% to HKD3.82/share. Q-Tech (1478.HK) jumped 53% to HKD7.05/share after the company announced to step up production in 3D structured light modules and under-glass fingerprint recognition modules which received strong orders.

2 Economic News Trump downbeat ahead of trade talks with EU. U.S. President Donald Trump took a pessimistic view of talks with European Commission President Jean-Claude Juncker set for Wednesday aimed at averting a trade war. In a tweet on Tuesday night, Trump said both the United States and the European Union should drop all tariffs, barriers and subsidies. That would finally be called Free Market and Fair Trade! Trump said. Hope they do it, we are ready - but they won t! he said. Trump has accused the EU of unfair trade practices and has threatened to raise tariffs on cars imported from the bloc. (Reuters) Factbox: Strong U.S. dollar hurts U.S. firms across multiple industries. A rapid rise in the dollar has hurt second-quarter financial results and some U.S. companies are warning that the pressure could persist in future quarters. The U.S. dollar has risen 2.5 percent so far this year.dxy against a basket major currencies with most of its gains coming in the second quarter. As a result companies are starting to reevaluate their currency hedging strategies. Here are some of the U.S. companies blaming the stronger greenback for weaker revenue or profits: * Netflix Inc (NFLX.O) said last week that current-quarter operating profit margins would be narrower than previously expected because of strength in the U.S. dollar. Most of Netflix growth comes from overseas, but the majority of its costs remain dollar-denominated. (Reuters) Trump, Mexico expect progress in stalled NAFTA talks. U.S. President Donald Trump spoke warmly of Mexico s incoming leftist president on Monday, saying he expected to get something worked out on NAFTA, while a top Mexican official said there was scope to revive the trade talks this week. We re talking to Mexico on NAFTA, and I think we re going to have something worked out. The new president, terrific person, Trump said in a speech at the White House about American manufacturing. (Reuters)

3 Market News Asia stocks gain on firmer Wall St., China hopes; U.S. yields elevated. Asian stocks rode higher on Wednesday thanks to strong U.S. corporate earnings and hopes China will boost fiscal support for its economy, while long-term U.S. yields hovered near six-week highs on speculation the Bank of Japan could be less accommodative. MSCI s broadest index of Asia-Pacific shares outside Japan.MIAPJ0000PUS gained 0.17 percent. The index extended gains from the previous day, when it was lifted after China said it will adopt a more vigorous fiscal policy to help tackle external uncertainties. (Reuters) S&P reaches highest level since February as Alphabet shares soar. The S&P 500 on Tuesday closed at its highest level since Feb. 1 as Alphabet s blowout results bolstered expectations of a robust earnings season. Alphabet Inc (GOOGL.O) shares touched a record high of $1, after the online search company s quarterly results surpassed Wall Street estimates. The shares closed up 3.9 percent at $1, Google s parent company was the biggest boost to the S&P 500. Others in the FANG group of momentum stocks rose as well. Shares of Facebook Inc (FB.O) and Amazon Inc (AMZN.O) were up 1.8 percent and 1.5 percent, respectively. Both companies report earnings later this week. (Reuters) Oil prices rise for second day, buoyed by fall in U.S. inventories. Oil prices rose for a second day on Wednesday after industry group data showed U.S. crude inventories fell more than expected last week, easing worries about oversupply that had dragged on markets in recent sessions. Brent crude was up 29 cents, or 0.4 percent, at $73.73 a barrel by 0035 GMT. The global benchmark settled 38 cents higher at $73.44 a barrel on Tuesday, after climbing as high as $74. U.S. West Texas Intermediate rose 22 cents, or 0.3 percent, to $68.74, having settled the previous session up 63 cents, or nearly 1 percent. (Reuters) Bitcoin breaks above $8,300 to two-month peak. Bitcoin rose above $8,300 on Tuesday to its highest level in two months, prompted by recent reports about impending approval in the United States for a cryptocurrency exchange-traded fund, which have helped bolster demand in recent sessions. Bitcoin, the biggest and bestknown virtual currency, was last up 6.33 percent at $8, on Luxembourg-based Bitstamp exchange. Ethereum, the No. 2 digital currency, climbed in step with bitcoin to its highest in five sessions. It was last up 4.79 percent at $ on Bitstamp. (Reuters)

4 Company Announcements ASM Pacific (00522) 1H profit $1.402B, down 6%; div $1.3. Net profit: HK$1.402B, down 6.08% YoYBasic EPS: HK$3.46Dividend per share proposed: HK$1.30. (Infocast News) CM Bank (03968) 1H profit rises 14% to RMB44.756B. China Merchants Bank (03968) said its net profit attributable to shareholders for the first half of 2018 increased 14.00% on year to RMB billion.. (Infocast News) Lianhua (00980): 1H turns around to RMB15-18M profit. Lianhua Supermarket Holdings (00980) expects a profit of RMB15-18 million for the six months ended 30 June 2018, as compared to a loss of RMB4.82 million for the corresponding period in (Infocast News) NagaCorp (03918) 1H profit US$180M, up 20%; div US$ Net profit: US$ M, up 19.58% YoYBasic EPS: US$0.0415Dividend per share proposed: US$ (Infocast News)

5 Today s Sector Focus The State Council recently indicated to adopt more expansionary fiscal policies to help tackle the potential impact from trade tensions. Beijing is expected to focus on tax and fee costs and at the same time boost infrastructure spending. Mainland infrastructure companies are expected to benefit in the near term and they extended gains to soar yesterday. China Railway (0390.HK) Shot up in recent sessions with hefty turnover. Challenged yearly highs yesterday. China Rail Cons (1186.HK) HKD7.55/share appears to be a good support. The long white candle indicates strong rising momentum.

6 China Comm Cons (1800.HK) Surged in recent sessions and recovered all the losses in recent weeks. 250-day MA at HKD8.71/share is the next resistance. Hang Seng Composite Sectors Sector Index Day (%) Week (%) MTD (%) YTD (%) Hang Seng Index (HSI) 28, Hang Seng Composite 3, HSCI Utilities 8, HSCI Industrial Goods 1, HSCI Materials 6, HSCI Conglomerates 2, HSCI Telecommunication 1, HSCI Property & Construction 4, HSCI Info Technology 12, HSCI Consumer Goods 5, HSCI Financials 4, HSCI Services 4, HSCI Energy 9, HS Mainland 100 8, HS China Enterprises 10, HS China H-Financial 16, HS China Affiliated Corps 4, HS HK 35 3, HS HK Large Cap 2, HS HK MidCap 4, HS HK Small Cap 2, Source: Bloomberg

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