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: Paul Sham 29 th July 2016 500 450 HSI hit 2016 high despite Shanghai slump HSI Weekly Movement Weekly Market Statistics 23,000 Week ended 29/7/2016 22/7/2016 Change % Hang Seng Index 21,891 21,964-73 -0.3% 400 350 300 250 200 150 100 50 0 22,219 22,130 22,174 21,964 21,993 51.97 49.40 21,891 71.56 69.69 62.89 67.87 23-Jul Mon Tue Wed Thu Fri Turnover Hang Seng Index Review & Outlook of Market Performance 22,500 22,000 21,500 21,000 HS Red Chip Index 3,714 3,779-65 -1.7% HS China Enterprises Index 8,959 9,032-73 -0.8% HS Hong Kong 35 Index 2,627 2,608 +19 +0.7% HS Mainland 100 Index 6,270 6,338-68 -1.1% Growth Enterprise Index 368 385-17 -4.5% Avg Daily Turnover 64.3 57.3 +7 +12.3% (HK$ bn ) Sectoral Indices Finance 28,083 28,344-260 -0.9% Utilities 54,841 54,876-35 -0.1% Properties 32,999 32,831 +168 +0.5% Comm & Ind 13,248 13,242 +6 +0.0% Trading in Hong Kong was quiet on Monday as investors awaited results from the policy meetings of the US Federal Reserve and Bank of Japan later this week. Better-than-expected earnings from Macau casino operators helped propel the HSI to breach 22,200 level, their highest close this year on Wednesday. Nevertheless, the gain was capped by the report about possible curbs on wealth management products in China, adding to concern that regulatory efforts to reduce risks in the financial system will limit flows into equities. As expected, the US Federal Reserve left interest rates on hold following the latest policy meeting and the stock market had little reaction on the decision. In contrast, the Bank of Japan's smaller-thanexpected stimulus programme disappointed traders who had expected a huge boost to its economy, triggering a slump across Asian markets on Friday. Over the week, the HSI eased 73 points or 0.3% to 21,891.37, while the HSCEI slipped 0.8%. The daily average Mainboard turnover amounted to HK$64.3billion, up from HK$57.3 billion in the previous week. Several blue-chip companies reported their interim results during the week. AIA Group (#1299) reported an exciting 37% y-o-y rise in new business, driven by strong sales in both Hong Kong and China. On the other hand, Hang Lung Properties (#101) reported y-o-y jump on its underlying profit as strong local property sales offset weaker rental income on the Mainland. Results of Power Assets (#6) and CKI (#1038) disappointed investors as both utilities firms were hurt by the British pound s depreciation against the dollar. The first-half reporting season will step up a gear next week, with earnings release from CLP scheduled on Monday, and HSBC, Hang Seng Bank and Standard Chartered on Wednesday. On the other hand, investors will focus on the US July non-farm payrolls report to be released next Friday to get further insights into the labour market recovery pace in the US as well as the pace of interest rate hike. The Hang Seng Index is expected to further correct to below 21,500 level next week as investors may start to lock in profit after the benchmark index had risen more than 1,500 points since mid-june. 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 KLCI Index SET Index Weighted Index 29th July 18,456.35* 5,154.98* 16,569.27 2,869.75# 1,653.26 1,524.81# 8,984.41 22nd July 18,570.85 5,100.16 16,627.25 2,945.35 1,657.42 1,509.13 9,013.14 Change -114.50 +54.82-57.98-75.60-4.16 +15.68-28.73 % -0.6% +1.1% -0.3% -2.6% -0.3% +1.0% -0.3% Remark: (*) closing as of 28 th July 2016; (#) closing as of 17:00 29 th July 2016 Major Changes in Index Constituent s (Week ended 29 th July 2016) Hang Seng Index (HSI) Belle Int l 01880 HK$5.13 +HK$0.54 +11.8% Belle s 2Q same-store sales were better than that in 1Q, according its Chief Executive Sheng Baijiao. Sands China 01928 HK$29.6 +HK$1.80 +6.50% Sands China s chairman Sheldon Galaxy Entertainment 00027 HK$25.8 +HK$1.60 +6.60% Hang Seng China Enterprises Index (HSCEI) Adelson said he was optimistic that recreational gamblers and tourists were helping a recovery in Macau. China Vanke 02202 HK$17.54 +HK$1.42 +8.8% It was reported that China Vanke Chairman Wang Shi went to the headquarters of China Resources for a possible meeting. Wang was said to seek support from China Resources to avoid the Company being taken over by Baoneng Group. Hang Seng China-Affiliated Corporations Index (HSCCI) CNOOC 00883 HK$9.28 -HK$0.65-6.5% Oil prices fell to fresh lows since April as the reading from the Energy Information Administration on US oil stockpiles showed that demand for oil came up shy of expectations. 2
Major Results Announcements During the Week 1H16 Net profit y-o-y change Power Assets (#6) HK$3,476m +7.4% Cheung Kong Infrastructure (#1038) Hang Lung Properties (#101) HK$5,511m +4.9% HK$2,935m +3.3% AIA (#1299) US$2,065m -6.3% Drivers of performance Though Power Assets hurt by the British pound s depreciation against the dollar, the utilities firm still posted a 7.4% y-o-y rise in net profit for 1H16 as a loss from an asset sale pulled down profit in the year-earlier period. Excluding the HK$781m one-off profit from the sale of a minority stake in its Australia unit Spark Infrastructure in June, CKI s pre-tax profit declined 8.8% y-o-y, after the firm was hammered by the recent dramatic fall in the pound. Underlying profit rise 29% y-o-y to HK$3.17 billion for 1H16, thanks to strong sales of its Long Beach residential project during the period. Operating profit would have grown 14% y- o-y without currency fluctuations while new business value, a profitability measure of new policies would have increased 37%. Share price w-o-w chg +0.6% +0.5% +0.2% -1.0% Summary of US Economic News Indicator Change/Index Comments New home sales - June 2016 Durable goods orders - June 2016 FOMC Meeting - Federal Funds Rate Initial jobless claims week ended 23 rd July 2016 +20,000 m-o-m -4.0% m-o-m Unchanged +14,000 w-o-w New home sales burst to their best strength of the cycle during the Spring, coming in at a much higher-than-expected 592,000 annualized rate in June following a 572,000 rate in both May and April. Orders proved very weak for the factory sector for a second straight month in June, down 4.0% m-om. Core readings (with ex-transportation) were also lower for a second month, down 0.5% m-o-m. The US central bank left the target range for the benchmark federal funds rate unchanged at 0.2%- 0.5%, a level since last December, when rates were hiked for the first time in seven years. The US Fed mentioned that mounting risks to the US economy had subsided after the Brexit outcome and the labor market showed signs of improvement. Initial jobless claims for the week ended 23 rd July jumped 14,000 to 266,000. The 4-week average, however, was down slightly, 1,000 lower at 256,500 and more than 10,000 below a month ago. 3
Forthcoming Important Announcements / Events 1 st August 2016 (Monday) HK : CLP Holdings (00002) interim results Lee & Man Paper (02314) interim results Restaurant receipts and purchases statistics 2Q16 US : ISM Mfg Index July 2016 2 nd August 2016 (Tuesday) HK : Huaneng Power (00902) interim results Hutchison Telecommunications (00215) interim results Hysan (00014) interim results i-cable (01097) interim results Xinyi Glass (00868) interim results Retail sales June 2016 US : Personal Income and Outlays July 2016 Procter & Gamble quarterly earnings Pfizer quarterly earnings AIG quarterly earnings 3 rd August 2016 (Wednesday) HK : Hang Seng Bank (00011) interim results HSBC Holdings (00005) interim results San Miguel HK (00236) interim results StanChart (02888) interim results Yuexiu REIT (00405) interim results US : No important announcement/event 4 th August 2016 (Thursday) HK : Manulife (00945) interim results MGM China (02282) interim results TOM Group (02383) interim results US : Initial jobless claims week ended 30 th July 2016 5 th August 2016 (Friday) HK : China Resources Cement (01313) interim results US : Employment Situation July 2016 International Trade July 2016 4
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