9/F, 10 Des Voeux Road Central, Hong Kong. Dealing: 2308 8200 Research: 3608 8097 Facsimile: 3608 6113 HONG KONG RESEARCH Restricted circulation Weekly Report Analyst: Paul Sham 15 th March 2013 Turnover (HK$ bn) 300 270 240 210 180 150 120 90 60 30 0 HSI Weekly Movement 23,092 23,091 22,891 22,557 22,619 22,533 72.18 59.03 69.14 Property firms dragged down market 102.78 83.06 73.66 9-Mar Mon Tue Wed Thu Fri Turnover Hang Seng Index 24,000 23,500 23,000 22,500 22,000 21,500 21,000 20,500 20,000 Hang Seng Index Weekly Market Statistics Week ended 15/3/2013 08/3/2013 Change % Hang Seng Index 22,533 23,092-559 -2.4% HS Red Chip Index 4,338 4,559-220 -4.8% HS China Enterprises Index 11,021 11,484-463 -4.0% HS Hong Kong 35 Index 2,598 2,656-59 -2.2% HS Mainland 100 Index 6,604 6,883-280 -4.1% Growth Enterprise Index 406 413-7 -1.8% Avg Daily Turnover 77.5 73.2 +4 +5.9% (HK$ bn ) Sectoral Indices Finance 32,229 32,606-376 -1.2% Utilities 54,166 55,018-852 -1.5% Properties 29,913 31,698-1,784-5.6% Comm & Ind 12,508 12,931-423 -3.3% Review & Outlook of Market Performance The Hang Seng Index moved sideways at the beginning of the week as investors had been awaiting more policy-related news from the National People's Congress in Beijing. Nevertheless, without concrete favorable policies on both macro level and on specific industries during the meeting, market started to lose steam. Sentiment turned even sour and dropped to the 3-month low of 22,305.54 on Thursday after Shanghai A-share Index fell for five days in a row amid the imminent resumption of initial public offerings and rumors on further cooling measures on Chinese property market. The benchmark index was also weighted down by the sell-off of local property shares amid the rise in mortgage rates. With China market staging a mild rebound following the confirmation of Li Keqiang as China's premier, Hong Kong eventually finished at 22,533.11, down 2.42% or 558.84 points w-o-w. Average daily market turnover rose to HK$77.5 billion, compared with HK$73.2 billion a week ago. Local developers suffered sharp losses this week after HSBC and Standard Chartered raised mortgage rates, the first time since 2011. Investors are expecting the rate hike is just the start of a new rising mortgage-rate cycle and a long-awaited correction in property prices may finally happen. On the IPO front, investors continued to favor small-cap candidates with some novelty factors. Oi Wah Pawnshop Credit Holdings (01319), which raised only HK$98m and was the first of its kind to go public, jumped 34% on its debut on Tuesday. In contrast, Automobile engine manufacturer Power Xinchen (01148) fell 3% on the first day of trading and became the third IPO to close below its offer price at its trading debut this year. Over the week, blue chips companies like China Mobile, Ping An, Swire Pacific reported their FY12 final results but none of them provided meaningful support to the local market. Looking ahead, the upcoming earnings announcements of other big caps such as China Construction Bank, PetroChina, Sinopec, China Telecom, China Unicom, Tencent and China Shenhua should continue to be closely scrutinized by investors next week. Lingering worries over correction in Mainland stock markets will continue weighing on sentiment, and the critical support level for the key index is likely to be 22,300. This report has been prepared solely for information purposes and we, East Asia Securities Company Limited are not soliciting any action based upon it. Neither this document nor its contents shall be construed as an offer, invitation, advertisement, inducement or representation of any kind or form whatsoever. This document is based upon information, which we consider reliable, but accuracy and completeness are not guaranteed. Opinions expressed herein are subject to change without notice. At the time of preparing this report, we have no position in securities of the company or companies mentioned herein, while other Bank of East Asia Group companies may from time to time have interests in securities of the company or companies mentioned herein.
US & Regional Markets Weekly Update Date US US JAPAN SINGAPORE MALAYSIA BANGKOK TAIPEI Dow Jones NASDAQ Nikkei Avg STI KLSE Index SET Index Weighted Index 15th March 14,539.14* 3,258.93* 12,560.95 3,286.05 1,627.64 1,598.13 7,927.49 8th March 14,397.07 3,244.37 12,283.62 3,289.53 1,653.96 1,566.92 8,015.14 Change +142.07 +14.56 +277.33-3.48-26.32 +31.21-87.65 % +1.0% +0.4% +2.3% -0.1% -1.6% +2.0% -1.1% Remark: (*) closing at of 14 th March 2013 Major Changes in Index Constituent s (Week ended 15 th March 2013) Hang Seng Index (HSI) Code Closing Price @15/3/2013 W-O-W Change Absolute % Henderson Land 00012 HK$48.50 -HK$4.05-7.7% SHK Properties 00016 HK$106.20 -HK$8.70-7.6% Hang Seng China Enterprises Index (HSCEI) Code Closing Price @15/3/2013 W-O-W Change Remarks / Comments HSBC and Standard Chartered raised mortgage rates by 0.25% this week, the first time since 2011. Property stocks took hit on expectation that the rate hike may continue. Remarks / Comments Absolute % ZTE 00763 HK$14.60 +HK$0.84 +6.1% ZTE bucked the market downtrend to trade higher as China Mobile plans to spend almost US$7 billion this year in building its 4G network, much larger than analysts expected. In addition, ZTE becomes the first Chinese company to be ranked inside the Top- 10 for patent applications by the European Patent Office. Hang Seng China-Affiliated Corporations Index (HSCCI) Franshion Properties Code Closing Price @15/3/2013 W-O-W Change Absolute % 00817 HK$2.37 -HK$0.34-12.5% Yuexiu Property 00123 HK$2.28 -HK$0.23-9.2% China Resources Land 01109 HK$19.40 -HK$1.70-8.1% Remarks / Comments The mainland reports claimed the Shenzhen housing regulator barred developers from pricing new homes at levels higher than the average for new units launched in the previous month. Chinese developers extended declines even though Shenzhen housing authorities denied the media reports one day later. 2
Summary of US Economic News Indicator Change/Index Comments Retail sales in February were strong albeit payroll tax increases and delayed income tax returns. Retail Sales Retail sales jumped 1.1%, following a rise of 0.2% +1.1% - February 2013 in January. In view of the February strength and mild upward revisions to January, recent forecasts for first quarter GDP have been nudged up. The February PPI saw a strong rise of 0.7%, following a rebound of 0.2% in January. However, Producer Price Index +0.7% the core rate, which excludes both food and - February 2013 energy, rose 0.2%, matching the prior month's pace. Initial jobless claims fell 10,000 for the week Initial jobless claims ended 9 th March to 332,000, which indicated week ended 9 th -10,000 March 2013 better improvement in the labour market than market expectation. Major Earnings Results Announcements During the Week MTR Corporation (00066) Cathay Pacific Airways (00293) China Mobile (00941) Ping An Insurance (02318) Swire Pacific (00019) Kerry Properties (00683) Net profit y-o-y change HK$1,353m -13.0% HK$916-83.3% RMB129.3bn +2.7% RMB20,050m +3% HK$17,484m +45.7% HK$6,960m +30% Drivers of performance Net profit of MTR Corp fell 13% as fewer property sales and a fall in revaluation gain offset an increase in rail and retail income. Hit by pricing pressures in its premium cabins and continued cargo weakness, Cathay Pacific posted its worst annual results since the financial crisis, with net profit dropping 83% last year. China Mobile posted only a mild 2.7% rise in 2012 net profit as the world's largest mobile operator by subscribers grappled with low-end users and high handset subsidies. Ping An Insurance posted mild earning growth of 3% in 2012 as a decline in investment income offset higher revenue from its banking operations. Swire Pacific (00019) reported a 45.7% drop in net profit, hurt by significantly lower profit contributions from Cathay Pacific (00293). Kerry Properties reported FY12 net profit of HK$6,960m, up 30% y-o-y, attributable to stronger property sales in Hong Kong. Share price w-o-w chg -6.0% -4.0% -2.0% -6.4% -5.1% -6.2% 3
Forthcoming Important Announcements / Events 18 th March 2013 (Monday) 19 th March 2013 (Tuesday) 20 th March 2013 (Wednesday) HK : Beijing Airport (00694) final results China Liansu (02128) final results China Overseas (00688) final results China Resources Power (00836) final results China Properties (01838) final results Emperor Watch & Jewellery (00887) final results Fantasia (01777) final results Haier Electronics (01169) final results HK & China Gas (00003) final results Lee & Man Chemical (00746) final results Lee & Man Handbags (01488) final results Lee & Man Paper (02314) final results Mingfa Group (00846) final results Powerlong (01238) final results Roadshow (00888) final results Samsonite (01910) final results Shanshui Cement (01910) final results Tingyi (00322) final results West China Cement (02233) final results Yue Xiu Transport (01052) final results US : Housing Market Index March 2013 HK : Unemployment and Underemployment Statistics December to February 2013 China Shipping Development (01138) final results China Taiping (00966) final results Chongqing Machinery (02722) final results Country Garden (02007) final results Goodbaby (01086) final results Huaneng Renewable (00958) final results Huaneng Power (00902) final results Intime (01833) final results Kingsoft (03888) final results Kingway Brewery (00124) final results Minth Group (00425) final results Sinotrans (00598) final results Zhejiang Expressway (00576) final results US : Housing Starts February 2013 HK : BBMG (02009) final results China Dongxiang (03818) final results China Power (02380) final results China Telecom (00728) final results China Travel (00308) final results Dah Sing Financials (00440) final results Dah Sing Banking (02356) final results Dongyue Group (00189) final results Geely Auto (00175) final results Poly Property (00119) final results R&F Properties (02777) final results Tencent (00700) final results FedEx Q3 2013 results US : FOMC Meeting Announcement FOMC Forecasts 4
21 st March 2013 (Thursday) 22 nd March 2013 (Friday) HK : Consumer Price Index February 2013 China Resources Enterprise (00291) final results China Unicom (00762) final results Chow Sang Sang (00116) final results Cosco International (00517) final results Great Wall Motor (02333) final results Kunlun Energy (00135) final results Li & Fung (00494) final results PetroChina (00857) final results Shangri-la Asia (00069) final results Sun Hung Kai (00086) final results Weichai Power (02338) final results Yuexiu Property (00123) final results US : Initial jobless claims week ended 16 th March 2013 Existing Home Sales February 2013 Philadelphia Fed Survey March 2013 Nike Q3 2013 results HK : Anhui Conch (00914) final results Anhui Expressway (00995) final results Asia Cement (00743) final results BYD Company (01211) final results China Construction Bank (00939) final results China Oilfield (02883) final results China Shenhua (01088) final results CQRC Bank (03618) Datang Renewable Power (01798) final results Golden Eagle (03308) final results Goldwind (02208) final results Greentown China (03900) final results Jiangsu Expressway (00177) final results Shenzhen Expressway (00548) final results Sinopec (00386) final results Yanzhou Coal (01171) final results Yurun Food (01068) US : Tiffany Q4 2012 results 5
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