Turnover (HK$ bn) Hang Seng Index EAST ASIA SECURITIES COMPANY LIMITED 9/F, 10 Des Voeux Road Central, Hong Kong. Dealing: 2308 8200 Facsimile: 3608 6113 Restricted circulation Weekly Report 10 th August 2018 500 450 400 350 300 250 200 150 100 50 0 27,676 27,820 HSI revived as bargain hunting emerged HSI Weekly Movement 28,249 28,359 28,607 28,367 88.25 85.56 89.00 93.10 91.12 84.75 3-Aug Mon Tue Wed Thu Fri Turnover Hang Seng Index 31,000 30,500 30,000 29,500 29,000 28,500 28,000 27,500 27,000 26,500 26,000 25,500 25,000 Weekly Market Statistics Week ended 10/8/2018 03/8/2018 Change % Hang Seng Index 28,367 27,676 +690 +2.5% HS Red Chip Index 4,274 4,179 +96 +2.3% HS China Enterprises Index 10,943 10,694 +249 +2.3% HS Hong Kong 35 Index 3,231 3,162 +70 +2.2% HS Mainland 100 Index 8,430 8,186 +244 +3.0% Growth Enterprise Index 197 200-2 -1.2% Avg Daily Turnover 88.7 89.1-0 -0.5% (HK$ bn ) Sectoral Indices Finance 38,831 38,072 +759 +2.0% Utilities 58,097 56,890 +1,207 +2.1% Properties 38,175 37,447 +728 +1.9% Comm & Ind 16,896 16,340 +556 +3.4% Review & Outlook of Market Performance Investors turned less panic and started bargain hunting during the week, which lent support to the Hang Seng Index. The HSI staged a four-day winning streak before a breather on Friday. A rebound in the Shanghai Composite Index from the 2,700 level during the week also helped soothe investor sentiment and lent support to the HK stock market. Over the week, the Hang Seng Index rebounded 690.30 points or 2.49% to 28,366.62, while the HSCEI rose 2.33% to 10,943.08. The daily average Mainboard turnover amounted to HK$88.7 billion, little changed from HK$89.1 billion in the previous week. The Sino-US trade war continued, after the US announced the list of US$16 billion Chinese goods subject to 25% tariffs effective from 23 rd August. US$34 billion out of the first round of US$50 billion of Chinese goods subject to additional tariffs had already become effective from 6 th July. The US trade move was matched by China s retaliatory tariffs on the same amount of US imports. On the economic front, China exports rose a better-than-expected 12.2% (in USD terms) in July, as exporters rushed for shipment before the new US tariffs took effect. Meanwhile, both index heavyweights HSBC (#5) (+0.41% w-o-w) and China Mobile (#941) (+3.75%) released their respective first-half results during the week, and MTR Corporation (#66) (-5.99%) stole the spotlight after it revealed top management reshuffle following the Sha Tin-Central rail link construction scandal. The railway operator also reported a mild 5% y-o-y decline in 1H18 profit (in line with market expectation), as it booked less profit from property development during the first half. For the coming week, investors will keep close eyes on bellwether Tencent (#700) (+5.77%), as the Internet giant will release its first-half results on 15 th August (Wednesday). Consensus forecast is expecting Tencent s non-gaap net profit to grow by 15%-27% y-o-y in the six months ended June 2018. 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 10th August 25,509.23* 7,891.78* 22,298.08 3,286.99 1,805.75 1,709.33 10,983.68 3rd August 25,019.41 7,825.98 22,712.75 3,260.35 1,721.93 1,643.52 10,864.54 Change +489.82 +65.80-414.67 +26.64 +83.82 +65.81 +119.14 % +2.0% +0.8% -1.8% +0.8% +4.9% +4.0% +1.1% Remark: (*) closing as of 9 th August 2018; (#) closing as of 17:00 10 th August 2018 Major Changes in Index Constituent s (Week ended 10 th August 2018) Hang Seng Index (HSI) MTR Corporation 00066 HK$40.05 -HK$2.55-5.99% MTRC was the biggest loser in the HSI and fell to one-year lows during the week, after it announced top management revamp following the Sha tin-central rail link construction scandal. Four senior project directors are fired, while CEO Lincoln Leong will seek early retirement. Meanwhile, MTRC reported a 5% y-o-y decline in net profit to HK$7.1 billion in 1H18 on reduced property sales, which was in line with market expectation. Hang Seng China Enterprises Index (HSCEI) Great Wall Motor 02333 HK$4.80 -HK$0.54-10.11% The PRC automaker tumbled during the week, after it reported a 21% y-o-y decline in automobile sales in July. For the first seven months of 2018, sales volume slipped 0.8% from a year earlier. Hang Seng China-Affiliated Corporations Index (HSCCI) China Mobile 00941 HK$71.85 +HK$2.60 +3.75% China Mobile reported an unexciting 5% earnings growth in the first half. Nonetheless, the mobile carrier proposed a higher dividend payout with payout ratio inching up to 48% from 46% a year ago, which cheered investors. 2
Major Results Announcements During the Week China Mobile (00941) CLP Holdings (00002) Galaxy Entertainment (00027) Hang Seng Bank (00011) Hong Kong Exchanges & Clearing (00388) HSBC Holdings (00005) MTR Corp (00066) Swire Pacific (00019) Wharf Real Estate Investment Company (Wharf REIC) (01997) 1H2018 Net profit y-o-y change RMB65.6 billion +5% HK$7.4 billion +26% HK$7.2 billion +56% HK$12.6 billion +29% HK$5.0 billion +44% US$7.2 billion +2% HK$7.1 billion -5% HK$13.5 billion +11% HK$10.2 billion +108% Summary China Mobile registered flattish earnings in 1H18, as cost control efforts and a lower effective income tax rate lent support to the bottom line. CLP reported strong earnings in 1H18, mainly driven by its PRC and Australian operations. The Macau casino operator reported strong earnings growth in 1H18, driven by a solid 25% y-o-y top-line growth. HSB s earnings grew strongly in 1H18, thanks to robust net interest income amid improved net interest margin. HKEX reported sharply higher earnings in 1H18, thanks to more active trading volume during the first half when compared with a year earlier. HSBC s earnings results remained largely stable in the first half, with reported pre-tax profit up by 5% y-o-y in 1H18. MTRC reported slightly weaker earnings in 1H18 on lower profit from property development. Excluding investment property revaluation, Swire s adjusted underlying profit (excluding impairment charge against its marine operations) surged 40% y-o-y, thanks to gain from disposal of interests in investment properties. Wharf REIC s underlying profit grew 8% y-o-y to HK$5.0 billion in 1H18, driven by solid contribution from its flagship Harbour City shopping complex. Share price w-o-w chg +3.75% +3.70% +3.85% +3.26% +2.77% +0.41% -5.99% +3.23% -1.26% Summary of US Economic News Indicator Change/Index Initial jobless claims week ended 4 th August 2018 Producer price index July 2018-6,000 +0.0% Initial jobless claims dropped 6,000 to 213,000 last week, bucking market expectation of a rise to 220,000. The PPI was unchanged in July, compared with market expectation of a 0.2% rise. 3
Forthcoming Important Announcements / Events 13 th August 2018 (Monday) HK : K Group (08475) trading debut Sunny Optical (02382) interim results US : No important announcement/event 14 th August 2018 (Tuesday) HK : WH Group (00288) interim results US : Home Depot Q2 results 15 th August 2018 (Wednesday) HK : Eternity Technology (01725) trading debut China Unicom (00762) interim results Tencent (00700) interim results US : Retail sales July 2018 Productivity Q2 2018 Industrial production July 2018 16 th August 2018 (Thursday) HK : China Resources Power (00836) interim results US : Initial jobless claims week ended 11 th August 2018 17 th August 2018 (Friday) HK : Unemployment & underemployment May-Jul 2018 US : Consumer sentiment August 2018 Index of leading economic indicators July 2018 4
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