Turnover (HK$ bn) Hang Seng Index 9/F, 10 Des Voeux Road Central, Hong Kong. Dealing: 2308 8200 Research: 3608 8098 Facsimile: 3608 6113 HONG KONG RESEARCH Restricted circulation Weekly Report Analyst: Carmen Wong 26 th February 2016 500 450 400 350 300 250 200 150 100 50 0 HSI rebounded to 19,000 awaiting messages from G20 meeting HSI Weekly Movement 19,286 19,464 19,415 19,192 18,889 19,364 55.39 60.20 58.74 60.70 63.68 62.47 19-Feb Mon Tue Wed Thu Fri 21,000 20,500 20,000 19,500 19,000 18,500 18,000 17,500 17,000 Weekly Market Statistics Week ended 26/2/2016 19/2/2016 Change % Hang Seng Index 19,364 19,286 +79 +0.4% HS Red Chip Index 3,488 3,491-4 -0.1% HS China Enterprises Index 8,034 8,113-78 -1.0% HS Hong Kong 35 Index 2,311 2,283 +28 +1.2% HS Mainland 100 Index 5,600 5,637-36 -0.6% Growth Enterprise Index 425 423 +2 +0.4% Avg Daily Turnover 61.2 66.6-5 -8.2% (HK$ bn ) Sectoral Indices Finance 25,409 25,336 +73 +0.3% Utilities 50,727 50,165 +562 +1.1% Properties 26,171 26,105 +66 +0.3% Comm & Ind 11,712 11,656 +56 +0.5% Turnover Hang Seng Index Review & Outlook of Market Performance Hong Kong shares strengthened on Monday, tracking gains in mainland stocks, which jumped after Beijing replaced removed Xiao Gang from his post as the Chairman of the China Securities Regulatory Commission (CSRC) and replaced him with Liu Shiyu, the Chairman of the Agricultural Bank of China Ltd. Shares pulled back later on with the benchmark index slipping below 19,000, due to profits taking by investors and lower oil prices after Saudi Arabia ruled out production cuts. Nevertheless, the benchmark Index bounced back along with the Chinese stock markets on Friday, on anticipation of policy messages from Chinese and global leaders gathering for G20 meeting in Shanghai. Over the week, the HSI edged up 79 points or 0.4% to 19,364, while the HSCEI was down by 1.0% to 8,034. The daily average Mainboard turnover amounted to HK$61.2 billion, reduced from HK$66.6 billion in the previous week. Macau gaming sector underperformed the market, after SJM Holdings (880.HK) and Galaxy Entertainment (27.HK) posted disappointing FY2015 results with net profit down 63.4% and 59.8% y-o-y respectively. Meanwhile, Chinese property stocks were broadly weak, as media reported Shenzhen was mulling policies to further curb the red-hot sentiment in property market. On the economic front, Hong Kong gross domestic product (GDP) advanced by 2.4% y-o-y (in-line with consensus) and 0.2% q-o-q in 4Q15 (vs. consensus of +0.3% q-o-q). Financial Secretary John Tsang said that the economy may expand by merely 1% to 2% yearly in 2016 during his annual budget speech, in view of a slump in tourist arrival and weak exports. Besides, Hong Kong s exports decreased for the ninth consecutive month in January which fell 3.8% y-o-y against a 1.1% y-o-y drop in December. Imports also slipped 9.0% y-o-y in January, worse than market expectations of a 6.3% yearly drop. Looking ahead, investors may eye on policy messages from the Fourth Session of the 12 th National People s Congress (NPC) which is scheduled to be convened in Beijing on 5 th March 2016. NPC is expected to deliberate on major issues pivotal to China s reform and economic development for the 13 th Five Year Plan (2016-2020). Additionally, a number of blue-chip companies such as the HKEx (388.HK) are set to release its final results in the coming week. 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 26th February 16,391.99* 4,504.43* 16,188.41 2,648.41 1,663.44 1,341.68^ 8,411.16 19th February 15,973.84 4,337.51 15,967.17 2,656.87 1,674.88 1,320.19 8,325.04 Change +418.15 +166.92 +221.24-8.46-11.44 +21.49 +86.12 % +2.6% +3.8% +1.4% -0.3% -0.7% +1.6% +1.0% Remark: (*) closing as of 25 th February 2016; (^) closing as of 17:20 26 th February 2016 Major Changes in Index Constituent s (Week ended 26 th February 2016) Hang Seng Index (HSI) 2 Tingyi 00322 HK$7.61 -HK$0.78-9.3% Tingyi issued a profit warning and estimated that its full-year profit would drop by 35% to 40% yearly, due to sales decline in instant noodles, provisions for beverage business and renminbi depreciation. China Resources Beer 00291 HK$12.42 -HK$0.74-5.6% Cheung Kong Infrastructure Holdings (1038.HK) will replace China Resources Beer as one of the Hang Seng Index constituent stocks, effective on 14 th March 2016. Bank of East Asia 00023 HK$24.85 +HK$1.45 +6.2% Chairman Dr. Li Kwok Po acquired 1 million and 0.5 million shares of the Bank of East Asia on 22 nd February and 23 rd February at an average price of HK$25.4 and HK$25.71 respectively. Li s holdings in the Bank will increase from 3.42% to 3.46% accordingly. Hang Seng China Enterprises Index (HSCEI) Dongfeng Group 00489 HK$9.22 -HK$0.69-7.0% Shares came under pressure, after the Company announced results of its joint ventures with Peuguot SA, which posted a 1.3% y-o-y revenue decline and merely 0.9% sales volume growth in 2015. Hang Seng China-Affiliated Corporations Index (HSCCI) Brilliance China Automotive 01114 HK$6.26 -HK$0.47-7.0% According to the figures from China Association of Automobile Manufacturers, automobile production was 2.452 million units, down 7.68% m- o-m. The automobile sales amounted to 2.5006 million units, down 10.23% monthly.
Major Results Announcements During the Week HSBC Holdings (00005) Hang Seng Bank (00011) New World Development (00017) Standard Chartered (02888) Chong Hing Bank (01111) FY2015 Net profit US$18.8 billion (profit before tax) y-o-y change +1.0% HK$27.5 billion +81.7% HK$3.30 billion (1HFY16 net profit) Loss of US$2.19 billion -43.6% -184.0% HK$1,193 million -56.5% AIA (01299) US$2.691 billion -22.0% Galaxy Entertainment (00027) Sino Land (00083) HK$4.161 billion -59.8% HK$3,733 million (1HFY16 net profit) +4.0% HKT (06823) HK$3,949 million +32.0% Drivers of performance Its profit before tax merely grew 1% y- o-y, as adjusted loan impairment charges and adjusted operating expenses climbed 17% and 5% y-o-y respectively. Net profit surged by 81.7% y-o-y, thanks to a gain on partial disposal of Industrial Bank of HK$10.6 billion and dividend of HK$119 million in 2015. Net profit tumbled by 43.6% y-o-y, dragged by a substantial decrease in the fair value change of investment properties (-98.0% year-on-year) and exchange loss on a weaker yuan. Standard Chartered recorded net loss of US$2.19 billion in 2015, against a net profit of US$2.61 billion in 2014, attributable to a sharp increase in loan impairment charges (+132.4% y-o-y) due to lower commodity prices and deterioration in India. Excluding net gains on disposal of Chong Hing Bank Centre in 2014, net profit would have increased by 51.0% y-o-y, as net interest income and net fee and commission income grew 29.7% and 36.2% y-o-y respectively. Net profit tumbled by 22.0% from the previous year, as the Company posted equity market losses of US$370 million in 2015 compared with equity market gains of US$508 million in 2014. The drop in net profit was mainly attributable to non-recurring charges of HK$1.2 billion, including pre-opening costs of HK$0.8 billion, as well as a significant increase in depreciation and amortization post the opening of Galaxy Macau Phase 2 and Broadway Macau. Excluding the effect of fair value changes on investment properties, underlying profit jumped 75.4% y-o-y to HK$1,714 million, boosted by a substantial gain on disposal of investment properties. HKT posted a 32.0% yearly growth in 2015 net profit, driven by a strong revenue growth in its mobile business which included the full 12-month contribution from the acquired CSL business. Share price w-o-w chg -1.4% +4.3% +3.0% -7.7% +5.1% +3.2% +1.4% +2.4% +3.2% 3
Summary of US Economic News Indicator Change/Index Comments Consumer confidence February 2016 92.2 Consumer confidence in February fell to the lowest level in seven months from 97.8 in January to 92.2. Consumers assessment of current conditions weakened due to less favorable views about business conditions and the labor market. New home sales January 2016 Initial jobless claims week ended 20 th February 2016 Durable goods orders January 2016-9.2% m-o-m +10,000 w-o-w +4.9% m-o-m New home sales dropped 9.2% from the previous month to a seasonally adjusted annual rate of 494,000 units, against consensus of 520,000. In particular, sales in the West plunged by 32.1% m- o-m to the lowest level since July 2014, dragged by a steep rise in home prices. Although the initial jobless claims increased by 10,000 to a seasonally adjusted 272,000 (vs. consensus of 270,000) in the week ended 20 th February 2016, the reading remained near its historic low showing the US labor market remains intact. The 4-week average fell 5,000 to 2.257 million. Durable goods orders posted a strong gain in January, up 4.9% from a month ago, better than market expectations of a 2.0% rise. Core capital goods orders, non-defense capital goods orders excluding aircraft, also climbed 3.9% m-o-m after tumbling by a revised 3.7% in December. Forthcoming Important Announcements / Events 29 th February 2016 (Monday) HK : China Everbright International Ltd (00257) - final results CLP Holdings Ltd (00002) - final results Hutchison Telecommunications (00215) - final results Lifestyle International Holdings Ltd (01212) - final results Pacific Basin Shipping Ltd (02343) - final results Yuexiu Property Co Ltd (00123) - final results US : Pending Home Sales Index January 2016 Tesco Corp 4Q results 1 st March 2016 (Tuesday) HK : Dah Chong Hong Holdings Ltd (01828) - final results Great Eagle Holdings Ltd (00041) - final results Lee & Man Paper Manufacturing Ltd (02314) - final results Vanke Property (Overseas) Limited (01036) - final results US : PMI Manufacturing Index February 2016 ISM Manufacturing Index February 2016 Construction Spending January 2016 2 nd March 2016 (Wednesday) HK : Hong Kong Exchanges and Clearing Ltd (00388) - final results US : No important announcements/ events 3 rd March 2016 (Thursday) HK : Retail sales statistics for January 2016 US : ISM Non- Manufacturing Index February 2016 Initial jobless claims week ended 27 th February 2016 4 th March 2016 (Friday) HK : Orient Overseas (International) Ltd (00316) - final results US : Unemployment Rate February 2016 4
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