Hong Kong/China Market

Transcription

1 Hong Kong/China Market Technical Strategy The S&P500 has been on positive run since Apr18 Indices Latest Chg. Pts HSI 27, HSI Future 27, DJIA 25, S&P 500 2,862-1 NASDAQ 7, H-share 10, Red-chip 4, Shanghai Comp 2, Shenzhen Comp 1, While trading outlook remains bullish in the near term, the index is set to challenge the 2872 points resistance soon. Hong Kong Market Review Optimism continues. Rising momentum of the local bourse remains robust boosted by the satisfactory 1H18 earnings of corporates. That the US looks set for the longest bull run in history also provided impetus to the local bourse. The HSI opened 83 points higher and and once dived to red on profit taking. But the index shot up immediately to gain as most as 200 points. The local bourse closed near day highs by gaining 174 points to Turnover maintained at over HKD100bn. Shanghai-HK southbound capital experienced net outflow for the 7th consecutive day. Tencent (0700.HK) has been on the top rank despite mainland media reporting that the new games approval process could resume next month. It's shares extended rebound by gaining 2.5% to HKD359.4/share. Mengniu (2319.HK) was also the top 3 with shares dipping 2.85% to HKD22.25/share. AAC (2018.HK) reported declining net profit for 2Q18 which was a market surprise. Gross Margin drop of 4.3% was mainly due to RMB appreciation in 2Q18 which impacts 3% to the margin while others are due to product mix changes. Market is concerned about the further deterioration of gross margin and the growth drivers forward. But its shares recouped all the intraday losses and gained 1% to HKD88.35/share.

2 Economic News Fed officials suggest rates likely to rise soon, worry about trade war. Federal Reserve officials discussed raising interest rates soon to counter excessive economic strength but also examined how global trade disputes could batter businesses and households, minutes of the U.S. central bank s last policy meeting showed. The Fed, which released the readout from its July 31-Aug. 1 meeting on Wednesday, has been raising rates gradually since 2015 and is now concerned the economy is so strong that inflation could rise persistently above its 2 percent target. Fed policymakers left rates unchanged at their last meeting, but their discussion made it clear they are considering another rate hike soon. The Fed has raised rates twice this year and is widely expected to tighten policy again next month. (Reuters) U.S. and China officials meet as Thursday tariff deadline looms. U.S. and Chinese officials met for the first time in more than two months to try find a way out of their deepening trade conflict, but there was no evidence that the low-key discussions would halt a new round of U.S. tariffs due on Thursday. A delegation of Chinese officials entered the U.S. Treasury Department on Wednesday for talks, video on CNBC showed. Business groups expressed hope that the two-day meeting would mark the start of serious negotiations over Chinese trade and economic policy changes demanded by President Donald Trump. (Reuters) U.S. economy set to slow from here on, damaged by trade war: Reuters poll. U.S. economic growth will slow steadily over the coming quarters after touching a four-year high in April-June, according to a Reuters poll of economists who expect President Donald Trump s trade war to inflict damage. Boosted in part by a $1.5 trillion tax cut package passed late last year, the U.S. economy expanded at an annualized rate of 4.1 percent in the April-June quarter, its strongest performance in nearly four years. (Reuters) U.S. job gains in year through March likely to be revised up by 43,000. The U.S. economy likely created 43,000 more jobs in the 12 months through March than previously estimated, the Labor Department said on Wednesday. The marginal increase, which the Labor Department said represented less than a 0.05 percent gain versus current estimates, is a preliminary estimate of the government s annual benchmark revision to nonfarm payrolls data. Job growth in the U.S. economy remains relatively strong despite the labor market being near full employment. (Reuters)

3 Market News Wall St. end mixed as S&P marks longest bull run. U.S. stocks were mixed on Wednesday, with the Nasdaq gaining on the strength of tech stocks while the S&P 500 was little changed as it marked its longest bull-market run. The legal woes of two former advisers to U.S. President Donald Trump contributed to investors caution, while the release of the Federal Open Market Committee s minutes from its last policy meeting had only a fleeting impact on Wall Street s major indexes. U.S. central bankers discussed raising interest rates soon to counter excessive economic strength but also examined how global trade disputes could batter businesses and households. (Reuters) U.S. oil extends gains after crude inventories decline. U.S. oil prices on Thursday extended gains from the previous session on a fall in U.S. commercial crude inventories, while international crude markets were weaker due to the trade dispute between the United States and China. U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $67.95 per barrel at 0044 GMT, up 9 cents, or 0.1 percent, from their last settlement. U.S. commercial crude oil inventories C-STK-T-EIA fell by 5.8 million barrels in the week to Aug. 17 to million barrels, the Energy Information Administration (EIA) said on Wednesday. (Reuters) Chinese traders ditch cheap U.S. coal for domestic supply as tariffs loom. Some Chinese coal traders handling U.S. imports have begun sourcing future supplies domestically, people with knowledge of the matter said, as they await delivery of the last U.S. cargoes to arrive before hefty tariffs kick in on Thursday in a deepening trade row between the world s top two economies. At least six cargoes of U.S. coal were due to arrive this month, Thomson Reuters Eikon shipping data showed, but at least three were still en route or waiting off ports to unload cargo on Wednesday. (Reuters)

4 Company Announcements Guangshen Rail (00525) 1H profit rises 29% to RMB654M. Net profit: RMB M, up 28.58% YoYBasic EPS: RMB0.09Dividend per share proposed: (Nil). (Infocast News) TVB (00511) 1H profit rises 18% to $201M; div $0.3. Net profit: HK$ M, up 18.31% YoYBasic EPS: HK$0.46Dividend per share proposed: HK$0.30. (Infocast News) China Ovs Ppt (02669) 1H profit $221M, up 39%; div $0.02. Net profit: HK$ M, up 38.63% YoYBasic EPS: HK$0.0672Dividend per share proposed: HK$ (Infocast News) China Oilfield (02883) 1H loss drops to RMB375M. Net loss: RMB M (RMB M net loss for the same period last year)basic LPS: RMB0.0786Dividend per share proposed: (Nil). (Infocast News) Hopewell Hold (00054) FY18 profit soars 357%; div $0.88. Net profit: HK$8.969B, up % YoYBasic EPS: HK$10.31Second interim dividend per share proposed: HK$0.88. (Infocast News)

5 Today s Sector Focus The Ministry of Culture and Tourism of China reported a 12.5% yoy increase in domestic tourism, which indicates a potential revenue growth for the mainland airline operators. In addition, the cooling of oil prices as well as the stabilizing Renminbi help considerably on the trading outlook of the mainland aviation sector. China East Air (0670.HK) Retaking the 10-day MA improves trading outlook. A near term resistance lies at HKD5.18/share, or the 50-day MA.. Air China (0753.HK) Selling pressure has eased after retaking the 10-day MA. 50-day MA at HKD7.48/share is a strong resistance.

6 China South Air (1055.HK) Retaking the 10-day MA is a positive sign. But momentum seems not enough indicated by dwindling turnover. Hang Seng Composite Sectors Sector Index Day (%) Week (%) MTD (%) YTD (%) Hang Seng Index (HSI) 27, Hang Seng Composite 3, HSCI Utilities 7, HSCI Industrial Goods 1, HSCI Materials 5, HSCI Conglomerates 2, HSCI Telecommunication 1, HSCI Property & Construction 4, HSCI Info Technology 12, HSCI Consumer Goods 5, HSCI Financials 3, HSCI Services 3, 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

7 - Analyst Certification Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to each security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report. Disclaimer This document is prepared by VC Brokerage Limited ( VC ) to provide information about the securities mentioned herein. It is for distribution only under such circumstances as may be permitted by applicable law. It has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. It is published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in this document. It should not be regarded by the recipients as a substitute for the exercise of their own judgment. Any prices or levels contained in these pages are indicative and may vary in accordance with changes in market conditions. Investors are warned that the price of any securities may fall in value as rapidly as it may rise and holders may sustain a total loss of their investment. No liability is accepted whatsoever for any direct, indirect or consequential loss arising from the use of this document, and no claims, actions or legal proceedings may be brought against VC in connection with this document in any manner whatsoever by any person dealing with the securities and/or the related financial instruments mentioned herein. Any opinions expressed in this document are subject to change without notice. VC is under no obligation to update or keep current the information contained herein. VC and its affiliates, their directors, officers and employees or clients may have or have had interests or long or short positions in the securities or other financial instruments referred to herein, and may at any time make purchases and/or sales in them as principal or agent. VC and its affiliates may have or have had a relationship with or may provide or has provided investment banking, capital markets and/or other financial services to the relevant companies. Employees of VC and its affiliates may serve or have served as officers or directors of the relevant companies. report are based upon sources believed to be accurate, but no responsibility is accepted for any loss occasioned by reliance placed upon the contents herein. Further information on the companies mentioned in this report is available