Hong Kong/China Market

Transcription

1 Hong Kong/China Market Technical Strategy The Hang Seng Composite Info-tech sub index (HSCIIT) has chalked up new highs recently Indices Latest Chg. Pts HSI 24, HSI Future 24, DJIA 20, S&P 500 2,388 4 NASDAQ 6, H-share 10, Red-chip 3, Shanghai Comp 3,155 2 Shenzhen Comp 1,907 7 The index correlates closely with Nasdaq, and the strong performance of latter bodes well for HSCIIT to march higher. Hong Kong Market Review Softens ahead of long weekend. The HSI corrected on Friday after having risen four sessions in a row. Investment sentiment weakened quite a bit ahead of the Labor Day long weekend. The benchmark index opened seven points lower and continued to drift lower throughout the day, although selling pressure was not particularly strong. The local bourse closed the day down 83 points, or 0.34%, to Turnover volume reduced to HKD65bn. Profit-taking. Result-performers declined as investors took profit. AIA (1299.HK) reported a strong growth in new business value but its share price retreated 1.19% to HKD53.85/share. Stanchart (2888.HK) dropped 3.38% to HKD72.9/share after having gained over the past couple of days. Automakers mixed. Greatwall Motor (2333.HK) reported 18.4% yoy earnings decline for 1Q17 and negative news plagued performance of other automakers. Greatwall plunged 5.48% to HKD8.44/share and Geely Auto (175.HK) dropped 1.5% to HKD10.5/share. Brilliance China (1114.HK) stayed unchanged at HKD13.04/share and Dongfeng Group (489.HK) gained 0.36% to HKD8.18/share.

2 Economic News Budget deal may map U.S. Congress road ahead, via Trump bypass. The U.S. Congress, bitterly divided for years along party lines, may be mapping a bipartisan path forward that skirts around President Donald Trump when he refuses to engage constructively with lawmakers, Democrats and some lobbyists said on Monday. The path was discernible in a nearly $1.2 trillion federal spending deal carved out over the weekend to avert a government shutdown. It had Democratic fingerprints all over it, even though Republicans control Congress and the White House. White House budget director Mick Mulvaney said Trump will sign the 2017 budget bill when he receives it from Congress on Thursday or Friday. Trump, in an interview with Bloomberg on Monday, said he was "very happy" with the deal announced late on Sunday. (Reuters) U.S. factory activity slows; inflation pressures subside. U.S. factory activity slowed in April while consumer spending was unchanged in March and a key inflation measure recorded its first monthly drop since 2001, but economists still expect an interest rate increase in June as the labor market tightens. The weak reports on Monday came ahead of the Federal Reserve's two-day policy meeting on Tuesday. Economists said policymakers were likely to view the raft of soft data as temporary. The U.S. central bank is not expected to raise interest rates at the end of the meeting on Wednesday. (Reuters) Trump says open to raising gasoline tax to fund infrastructure: Bloomberg. President Donald Trump said on Monday he would consider raising the federal tax on gasoline to fund infrastructure development, Bloomberg News reported. "It's something that I would certainly consider," Trump told the news agency in an interview on Monday. "The truckers have said that they want me to do something as long as that money is earmarked to highways." The Trump administration released an outline of a tax plan last week that would slash tax rates for businesses and reduce the number of tax brackets for individuals. (Reuters) China April official services PMI falls to 54.0 vs 55.1 in March. Growth in China's services sector slowed slightly in April compared with the previous month but remained robust, an official survey showed on Sunday. The official non-manufacturing Purchasing Managers' Index (PMI) stood at 54.0 in April, compared with the previous month's reading of 55.1 and above the 50-point mark that separates growth from contraction on a monthly basis. The March reading was the highest since May (Reuters) China April manufacturing growth slows faster than expected. Growth in China's manufacturing sector slowed faster than expected in April, an official survey showed on Sunday, as producer price inflation cooled and policymakers' efforts to reduce financial risks in the economy weighed on demand. The National Bureau of Statistics' official Purchasing Managers' Index (PMI) fell to a six-month low of 51.2 in April from March's near five-year high of Analysts polled by Reuters had predicted a reading of 51.6, the ninth straight month above the 50-point mark that separates growth from contraction on a monthly basis. (Reuters)

3 Market News Apple, tech lift Wall Street as Nasdaq sets record. Wall Street climbed on Monday, boosted by gains in Apple and other big tech stocks that more than offset weak economic data and pushed the Nasdaq Composite to another record high. Apple shares (AAPL.O) jumped 2 percent and set a record high, supporting the three major Wall Street indexes. The iphone maker is due to report its results on Tuesday. The S&P 500 technology index.splrct, the best performing major group this year, gained 0.9 percent, with big tech names including Microsoft (MSFT.O), Alphabet (GOOGL.O) and Facebook (FB.O) hitting records. (Reuters) Oil slips 1 percent as rising output faces weak demand worries. Oil slipped 1 percent on Monday as rising crude output on Libya and the United States countered OPEC-led production cuts aimed at clearing a supply glut. Signs of slower-than-expected growth in manufacturing in China and a weaker figure for U.S. manufacturing sentiment also weighed on expectations for oil demand and the market. Global benchmark Brent crude LCOc1 for July settled down 53 cents to $51.52 a barrel, while U.S. crude for June CLc1 dropped 49 cents, or 1 percent, to $48.84 a barrel. (Reuters) Dollar hits 1-month high vs yen as U.S. yields rise on Mnuchin comments. The dollar hit a one-month high against the yen on Tuesday, lifted by Treasury yields which surged after U.S. Treasury Secretary Steven Mnuchin commented on the possibility of ultra longterm bond issuance. The greenback last traded at yen after touching , its highest since March 31. The dollar was boosted as long-term Treasury yields soared to multi-week highs after Mnuchin reiterated his view in an interview with Bloomberg, saying the government issuing debt exceeding 30-years in maturity "can absolutely make sense." (Reuters) Trump says actively considering breaking up big banks: Bloomberg TV. U.S. President Donald Trump said he was actively considering breaking up big banks, Bloomberg Television reported on Monday. Trump's comments could give a push to efforts to revive the Depression-era Glass-Steagall law that separated commercial lending from investment banking. Reviving such a law would require an act by Congress. "I m looking at that right now, Trump said on Monday in an interview with Bloomberg News in the Oval Office. There s some people that want to go back to the old system, right? So we re going to look at that. (Reuters) Facing election defeat, France's Le Pen flip-flops on euro. French presidential candidate Marine Le Pen renewed her attack on the European Union's euro single currency on Sunday, a day after saying that ditching it might not be her top priority. The National Front (FN) candidate has a week to overturn the opinion poll lead of pro-eu centrist Emmanuel Macron before the run-off vote between the two on May 7. Voter surveys show Macron winning next Sunday with percent of the vote, and Le Pen's plans to quit the EU and the euro are among the least popular policies in her protectionist, antiimmigration electoral platform. (Reuters)

4 Company Announcements Huadian Power (01071) Q1 profit RMB11.84M, down 99%. For the first quarter of 2017, Huadian Power International (01071) had RMB million net profit attributable to the shareholders of the company, down 99.35% on year. The basic earnings per share was RMB (Infocast News) CPIC (02601) Q1 profit down 9% to RMB2B. For the first quarter of 2017, China Pacific Insurance (Group) (02601) had RMB2 billion net profit attributable to the shareholders of the company, down 9.0% on year. The basic earnings per share was RMB0.22. (Infocast News) COMEC (00317) Q1 profit RMB18.41M, up 16.8x. For the first quarter of 2017, CSSC Offshore & Marine Engineering (Group) (00317) had RMB million net profit attributable to the shareholders of the company, up 1,677.10% on year. The basic earnings per share was RMB (Infocast News) ICBC (01398) Q1 profit rises 1.37% to RMB75.786B. For the first quarter of 2017, Industrial and Commercial Bank of China (01398) had RMB billion net profit attributable to the shareholders of the company, up 1.37% on year. The basic earnings per share was RMB0.21. (Infocast News) BCQ (01963) Q1 profit rises 10.6% to RMB1.095B. For the first quarter of 2017, Bank of Chongqing (01963) had RMB1.095 billion net profit attributable to the shareholders of the company, up 10.6% on year. The basic earnings per share was RMB0.35. (Infocast News) YuHua Edu (06169) 1H profit drops 19%; div $ Net profit: RMB M, down 18.71% YoY Basic EPS: RMB0.06 Dividend per share proposed: HK$ (Infocast News) Huadian Fuxin (00816) Q1 profit down 0.6% to RMB507M. For the first quarter of 2017, Huadian Fuxin Energy (00816) had RMB million net profit attributable to the shareholders of the company, down 0.61% on year. (Infocast News) Chongqing Iron (01053) Q1 loss drops to RMB594M. For the first quarter of 2017, Chongqing Iron & Steel (01053) had RMB million net loss attributable to the shareholders of the company, compared to a larger net loss of RMB million for the first quarter of The basic loss per share was RMB0.13. (Infocast News) Anhui Expressway (00995) Q1 profit up 15% to RMB294M. For the first quarter of 2017, Anhui Expressway Company (00995) had RMB million net profit attributable to the shareholders of the company, up 15.47% on year. The basic earnings per share was RMB (Infocast News) Fosun Pharma (02196) Q1 profit RMB738M, up 16%. For the first quarter of 2017, Shanghai Fosun Pharmaceutical (02196) had RMB million net profit attributable to the shareholders of the company, up 16.32% on year. The basic earnings per share was RMB0.32. (Infocast News)

5 Today s Sector Focus China Eastern Airlines has announced its 1Q17 result which came in below market consensus forecast. High oil prices and weak Renminbi are said to be the main reasons. It appears that these negative factors will continue to weigh on the sector and investors chose to unwind their long position as a result. China East Air (0670.HK) Corrected markedly after topping out at HKD5/share. Struggled to defend the 100-day MA at HKD4.06/share in recent sessions. Air China (0753.HK) Recaptured the 10-day MA on Friday. Rising momentum is still intact amid trading above the ascending trend.

6 China Southern (1055.HK) The formation of a double top pattern is a bearish signal. Tried to defend a key support at HKD5.16/share last Friday. Hang Seng Composite Sectors Sector Index Day (%) Week (%) MTD (%) YTD (%) Hang Seng Index (HSI) 24, Hang Seng Composite 3, HSCI Utilities 7, HSCI Industrial Goods 1, HSCI Materials 5, HSCI Conglomerates 2, HSCI Telecommunication 1, HSCI Property & Construction 3, HSCI Info Technology 9, HSCI Consumer Goods 4, HSCI Financials 3, HSCI Services 3, HSCI Energy 8, HS Mainland 100 7, HS China Enterprises 10, HS China H-Financial 16, HS China Affiliated Corps 3, HS HK 35 2, 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