Wrapping up this past week, the Hang Seng Index jumped by over 700 points, with banking stocks and rumors on acquisitions driving up buying sentiment. Closing the week off though, we had quite a few negative earnings and economic news out from the US. Rather than having the bears charge back in with a big sell-off, investors seemed to have brushed it off once again. On Friday, consumer confidence levels came off short, this coincided with lower 3Q numbers from major retail outlets such as Wal-Mart, JCPenny and Abercrombie & Fitch. Regardless, on Friday both Dow Jones and Nasdaq closed in positive territory.
On the Hong Kong front, this coming week seems promising to test the 23,000 boundary again. The HKMA again boosted the reserves on Friday with continued capital flowing into the region keep equity and real-estate markets afloat. Chinese banks should continue to be the leaders with China Minsheng Bank's (1988.HK) IPO subscription still open to the public (more on my take of the IPO below). CCB (939.HK), ICBC (1398.HK), BOC (3988.HK) and Citic Bank (998.HK) continue to be my favorites. However, caution should be taken entering towards the end of the month, with average increases already far exceeding HSI and HSCEI by as much as 3x over the past few months subsequent to 3Q results (investors should remember that 4Q remains the quieter time for loan issuance). The rally as a result of better than expected 3Q numbers should just about be properly digested by the market, ending their recent rally.
On another agenda, I also favor Petrochina (857.HK). After disappointing 3Q numbers, China last week finally raised oil prices since September 30th. This would be the seventh time this year, which points to possibly better 4Q results. Furthermore, it lags it's counterpart CNOOC (883.HK) with a 96% positive correlation in price movement, HSI and HSCEI - pointing to a spark sometime soon.
1-Month Change (HSI: 2.52%, HSCEI: 4.68%, CNOOC (883): 4.33%, Petrochina (857): -0.70%)
2-Month Change (HSI: 8.09%, HSCEI: 10.74%, CNOOC (883): 17.20%, Petrochina (857): -10.93%)
As for China Minsheng Bank's IPO that will raise US$4.68 billion, I give two thumbs up. Being one of the first-to-list non-state controlled bank, they have more room to adjust quicker to market changes. Furthermore, at the higher range of HK$9.5 per share, P/B ratio will only be trading at 1.9 to 2.0x. Compare this with the other comparable Chinese banks that average between 2.0 to 2.8x, and it seems to be a good deal. On top of this HK$9.5 is only approximately a 2% premium to their A-shares last closing price of RMB8.13. To add more confidence, five major institutional investors have also joined in, including of which are Ping An Insurance, China's sovereign fund China Investment Corp., and notably George Soro's investment fund.
Finally, with US President Obama making his first visit to Shanghai, China - on the table for discussions will most likely be the Renminbi, environmental reforms and other economic incentives. Together with the USD finally reaching some resistance level, it may trigger a rally of the USD in the coming weeks. Environment related Chinese stocks may also be of focus with these talks.
Monday, November 16, 2009
Monday, November 9, 2009
Monday, 9 November 2009 (After Market Post)
Summary:
HSI 22,207.55 (Change: +377.83/1.73%)
Range: 21,941.62 - 22,214.85
Turnover HKD65.09B
HSCEI 13,318.48 (Change: +301.28/2.314%)
Range: 13,103.84 - 13,318.92
Update:
Alright, it's been quite a few months since I last posted any of my own personal investment thoughts. I've done rather, fairly, really, incredibly good these past few months (but then again, any rational investor would have done so as well). So I've decided to keep updating my investment journal again, but this time, it'll be based on actual investments and more thorough research with my own personal funds, my family's, as well as a few friends who have trusted me with some of their hard-earned money. A minimal amount just slightly above half a million HKD.
Once again, any insights are only for reference only, and are not to be relied upon or interpreted as investment recommendations. Please read for personal enjoyment and feel free to share with me your disagreements or other insights I might have missed.
Today's Wrap-up:
So the Hang Seng Index finally closed above 22,200 again, which was a very important psychological barrier being it's 50-day average. Last Friday after market close, US unemployment figures for the month of October was higher than expected, but investors seemed to have brushed away the lagging indicator and looked upon the leading factor that the change in unemployment, although at it's highest 10.2% is recovering and was at it's best this year. At this point, US Futures are pointing to a positive start, with the DJI +85 points and Nasdaq +15.75 points. The Hang Seng Index should continue its positive start this week, targeting approximately 22,400 range which should be the next initial resistance points marked on October 27.
Week's Outlook:
This week Hong Kong equities will be influenced greatly by earnings coming out of the USA. For Hong Kong itself, Alibaba.com will be reporting tomorrow, and figures from HSBC Finance Corp. (US) will be coming out overnight. Major consumer retail outlet chains in the USA will also be coming out, with Wal-Mart and Walt Disney on Thursday and JC Penny, Abercrombie & Fitch on Friday. On the economic front, we have initial unemployment claim figures coming out on Thursday, and trade balance figures and Michigan's consumer sentiment on Friday.
This Week's Buy:
Chinese banking stocks should continue to outperform the market this week, primarily China Construction Bank (939), Industrial & Commercial Bank (1398) and Bank of China (3988) to be the headers (BOC still lags CCB and ICBC, and ICBC closed at its one year high) - mainly given China's Minsheng Bank's IPO that starts subscriptions on Friday - the news should generate some hype in the market. There also seems to be capital flowing into the mining sector primarily into coals.
HSI 22,207.55 (Change: +377.83/1.73%)
Range: 21,941.62 - 22,214.85
Turnover HKD65.09B
HSCEI 13,318.48 (Change: +301.28/2.314%)
Range: 13,103.84 - 13,318.92
Update:
Alright, it's been quite a few months since I last posted any of my own personal investment thoughts. I've done rather, fairly, really, incredibly good these past few months (but then again, any rational investor would have done so as well). So I've decided to keep updating my investment journal again, but this time, it'll be based on actual investments and more thorough research with my own personal funds, my family's, as well as a few friends who have trusted me with some of their hard-earned money. A minimal amount just slightly above half a million HKD.
Once again, any insights are only for reference only, and are not to be relied upon or interpreted as investment recommendations. Please read for personal enjoyment and feel free to share with me your disagreements or other insights I might have missed.
Today's Wrap-up:
So the Hang Seng Index finally closed above 22,200 again, which was a very important psychological barrier being it's 50-day average. Last Friday after market close, US unemployment figures for the month of October was higher than expected, but investors seemed to have brushed away the lagging indicator and looked upon the leading factor that the change in unemployment, although at it's highest 10.2% is recovering and was at it's best this year. At this point, US Futures are pointing to a positive start, with the DJI +85 points and Nasdaq +15.75 points. The Hang Seng Index should continue its positive start this week, targeting approximately 22,400 range which should be the next initial resistance points marked on October 27.
Week's Outlook:
This week Hong Kong equities will be influenced greatly by earnings coming out of the USA. For Hong Kong itself, Alibaba.com will be reporting tomorrow, and figures from HSBC Finance Corp. (US) will be coming out overnight. Major consumer retail outlet chains in the USA will also be coming out, with Wal-Mart and Walt Disney on Thursday and JC Penny, Abercrombie & Fitch on Friday. On the economic front, we have initial unemployment claim figures coming out on Thursday, and trade balance figures and Michigan's consumer sentiment on Friday.
This Week's Buy:
Chinese banking stocks should continue to outperform the market this week, primarily China Construction Bank (939), Industrial & Commercial Bank (1398) and Bank of China (3988) to be the headers (BOC still lags CCB and ICBC, and ICBC closed at its one year high) - mainly given China's Minsheng Bank's IPO that starts subscriptions on Friday - the news should generate some hype in the market. There also seems to be capital flowing into the mining sector primarily into coals.
Tuesday, June 30, 2009
Tuesday, 30 June 2009 (After Market Post)
Summary
Hang Seng Index 18,378.73 (Change: -149.78/0.808%)
Range: 18,364.81 - 18,883.24
Turnover HKD65.13B
Hang Seng Index
HSI ends off 1H09 a little ugly, down just shy of a percent, and closing above its 10-day and 20-day averages. For the first half of 2009, HSI closed up 3,336 points (22.18%) from 15,042.81, reaching a low of 11,344.58 (Mar. 9) and a high of 18,889.68 (Jun. 12) ~ intra-day trading reached a high of 19,126.
1. Compared to DJI, HSI performed better. The Dow closes the day before 1H09 slightly down at 8,438.38 from 9,034.69 at the beginning of the year, down 596.31 points (6.6%), which reached a low of 6,547.05 (Mar. 9) and a high of 8,799.26 (Jun. 12). Dow futures are up 18 points at this point.
2. Compared to Nikkei, HSI performed better. The Nikkei 225 closed 1H09 slightly better, up 915.32 points (10.12%) to 9,958.44 from 9,043.12. Nikkei too was quite volatile during this first half, reaching lows of 7,054.98 (Mar. 10) and a high of 10,135.82 (Jun. 12).
3. Compared to Shanghai, HSI gets overshadowed. In fact, Shanghai is probably the leading performer for all of Asia, rising a staggering 1,078.64 points (57.35%) from 1,880.72 to 2,959.36, already its low and high, and just shy of 3,000 points.
Of HSI contributors, the best performer was Foxconn (2038.HK), rising $2.05 (67.66%) from HK$3.03 to HK$5.08. Worst performer was HSBC (0005.HK), down $11.35 (14.74%) from $77 to HK$65.65 (though it closed up HK$32.65, just shy of 100% from it's all-time low of HK$33 on Mar. 9).
HSI Outlook for 2H09
HSI is already at ~17x P/E, which is not that cheap. However, given current conditions, and depending on 2Q earnings to come out in July/August, HSI could possibly reach or even surpass 21,000 points. At this range, HSI P/E would be approximately ~20x-21x. However, given that HSI is bubbling from a liquidity-backed market, it can suffer a strong pull-back if capital is drained.
Hang Seng Index 18,378.73 (Change: -149.78/0.808%)
Range: 18,364.81 - 18,883.24
Turnover HKD65.13B
Hang Seng Index
HSI ends off 1H09 a little ugly, down just shy of a percent, and closing above its 10-day and 20-day averages. For the first half of 2009, HSI closed up 3,336 points (22.18%) from 15,042.81, reaching a low of 11,344.58 (Mar. 9) and a high of 18,889.68 (Jun. 12) ~ intra-day trading reached a high of 19,126.
1. Compared to DJI, HSI performed better. The Dow closes the day before 1H09 slightly down at 8,438.38 from 9,034.69 at the beginning of the year, down 596.31 points (6.6%), which reached a low of 6,547.05 (Mar. 9) and a high of 8,799.26 (Jun. 12). Dow futures are up 18 points at this point.
2. Compared to Nikkei, HSI performed better. The Nikkei 225 closed 1H09 slightly better, up 915.32 points (10.12%) to 9,958.44 from 9,043.12. Nikkei too was quite volatile during this first half, reaching lows of 7,054.98 (Mar. 10) and a high of 10,135.82 (Jun. 12).
3. Compared to Shanghai, HSI gets overshadowed. In fact, Shanghai is probably the leading performer for all of Asia, rising a staggering 1,078.64 points (57.35%) from 1,880.72 to 2,959.36, already its low and high, and just shy of 3,000 points.
Of HSI contributors, the best performer was Foxconn (2038.HK), rising $2.05 (67.66%) from HK$3.03 to HK$5.08. Worst performer was HSBC (0005.HK), down $11.35 (14.74%) from $77 to HK$65.65 (though it closed up HK$32.65, just shy of 100% from it's all-time low of HK$33 on Mar. 9).
HSI Outlook for 2H09
HSI is already at ~17x P/E, which is not that cheap. However, given current conditions, and depending on 2Q earnings to come out in July/August, HSI could possibly reach or even surpass 21,000 points. At this range, HSI P/E would be approximately ~20x-21x. However, given that HSI is bubbling from a liquidity-backed market, it can suffer a strong pull-back if capital is drained.
Tuesday, 30 June 2009 (Pre-market Post)
Final post of the month.
Today, should be another choppy day, being the last day of the month, and 1H09 for that matter. Yesterday night, the US and all of EU closed up in positive territory, reverting all the losses in Asia. Oil also closed above $71 a barrel in trading to start off the day.
Having said that, Asia should follow-suit today.
China for its consecutive fourth trading day closed up above its 1-year highs. Yesterday, head of the Central Bank, Zhou Xiaochuan, said that the economy was performing better as expected, and growth for China should reach 8% by the end of the year. A-shares should again perform well.
For the third time in less than a week, HKMA again injected funds into its reserve. Capital keeps flowing into Hong Kong, keeping everything afloat; boosting both equities and property prices. In such a liquidity-backed market, is there really going to be a correction to ~16,000 (15%) as most analysts and investors expect? Considering all factors, 1. capital inflow, 2. continued IPO activity, 3. thru-train with Guangdong, 4. HK banks with RMB-backed products and many others. I'm starting to rethink the situation. ~16,000 almost seems a bit too much, possibly ~17,500.
Today is the first of the three hyped IPOs, being sport apparel brand 361 Degrees International (1361.HK). In early trading, share priced to open at HK$3.68 already reached as high at HK$4.91, to fall back to HK$4.13. I would expect a surge of this one, and a positive drift afterwards of about ~40-50%. Following this, and the July 1st holiday (Hong Kong market will be closed), comes Chifu and BaWang on Thursday and Friday, respectively.
More to come as the day progresses.
Today, should be another choppy day, being the last day of the month, and 1H09 for that matter. Yesterday night, the US and all of EU closed up in positive territory, reverting all the losses in Asia. Oil also closed above $71 a barrel in trading to start off the day.
Having said that, Asia should follow-suit today.
China for its consecutive fourth trading day closed up above its 1-year highs. Yesterday, head of the Central Bank, Zhou Xiaochuan, said that the economy was performing better as expected, and growth for China should reach 8% by the end of the year. A-shares should again perform well.
For the third time in less than a week, HKMA again injected funds into its reserve. Capital keeps flowing into Hong Kong, keeping everything afloat; boosting both equities and property prices. In such a liquidity-backed market, is there really going to be a correction to ~16,000 (15%) as most analysts and investors expect? Considering all factors, 1. capital inflow, 2. continued IPO activity, 3. thru-train with Guangdong, 4. HK banks with RMB-backed products and many others. I'm starting to rethink the situation. ~16,000 almost seems a bit too much, possibly ~17,500.
Today is the first of the three hyped IPOs, being sport apparel brand 361 Degrees International (1361.HK). In early trading, share priced to open at HK$3.68 already reached as high at HK$4.91, to fall back to HK$4.13. I would expect a surge of this one, and a positive drift afterwards of about ~40-50%. Following this, and the July 1st holiday (Hong Kong market will be closed), comes Chifu and BaWang on Thursday and Friday, respectively.
More to come as the day progresses.
Friday, June 26, 2009
Friday, 26 June 2009 (Mid-day Post)
Summary
Hang Seng Index 18,487.65 (Change: +212.62/1.163%)
Range: 18,360.71 - 18,519.69
Turnover HKD32.82B
Hang Seng Index
Why does turnover continue to shrink day-over-day? Especially with so much capital coming into the market? Those questions keeps bothering me. And because of those nagging issues, I still don't see HSI jumping massively, rather I see it go up and down and up and down in the near run.
But having said that, things are definitely looking good at the moment. Today head of HKMA, Joseph Yam again said that they will be injecting more funds into their reserve to maintain the USD peg. That's two consecutive days in a row now, and hence capital continues to keep liquidity in the market. But how long can this persist? How about this, I believe we can still see positive upside until around July 3-5, when the super hyped and 420x oversubscribed IPO Ba Wang comes onto the market. Like Jackie Chan in his ridiculous commercials comments, trading activity should "ba-huang huang" and soar in secondary trading. Also with the release of so much capital that frozen-up, the following few days should also drift nicely.
Yesterday the US finally closed up, catching up with world indices after four days of dropping. Ironically, negative news on unemployment and decline in GDP was overlooked, and doesn't seem to be having an impact on Asia either. Neither did the news out of UK that British Banks will still be experiencing some trouble in the coming months. But evidiently, HSBC is getting some selling pressue at HK$65, down HK$0.85 (-1.29%).
For the third consecutive day, HSI has gone up above 20-day average, gaining everything that was lost last week. As I mentioned in my earlier blogs, HSI should continue to close up above 18,000, and prior to end of June as managers close their 2H books.
China Construction Bank (0939.HK)
Closing at HK$6.10, CCB has gone up far beyond my expected HK$6.00. News today that loans in June may have surpassed initial expectations brings positive optimism again. Perhaps this will be my first time I am starting to get concerned. Although long-term wise (over the next year), I still see CCB HK$6.70+, in the near-term (over the next month), growth should be limited (possibly only another ~1-2%) before a mild correction.
GOME Electrical Appliances (0493.HK)
Closing at HK$1.90, it's gone down quite a bit from it's high of HK$2.32 a couple of days ago. I don't see it jumping substantially in the short-term, but to hover around HK$1.80-1.99. I still remain very optimistic though, seeing its price to rise as high as HK$2.50 over the next year. If you think about it, at HK$1.90 you're really paying for HK$1.71 a share after subscribing to new shares (Remember: every 100 shares has the right to buy 18 new shares at HK$0.64). A price appreciation to HK$2.00 is a good 17% gain, HK$2.50 an even better gain of 46.2%.
Hang Seng Index 18,487.65 (Change: +212.62/1.163%)
Range: 18,360.71 - 18,519.69
Turnover HKD32.82B
Hang Seng Index
Why does turnover continue to shrink day-over-day? Especially with so much capital coming into the market? Those questions keeps bothering me. And because of those nagging issues, I still don't see HSI jumping massively, rather I see it go up and down and up and down in the near run.
But having said that, things are definitely looking good at the moment. Today head of HKMA, Joseph Yam again said that they will be injecting more funds into their reserve to maintain the USD peg. That's two consecutive days in a row now, and hence capital continues to keep liquidity in the market. But how long can this persist? How about this, I believe we can still see positive upside until around July 3-5, when the super hyped and 420x oversubscribed IPO Ba Wang comes onto the market. Like Jackie Chan in his ridiculous commercials comments, trading activity should "ba-huang huang" and soar in secondary trading. Also with the release of so much capital that frozen-up, the following few days should also drift nicely.
Yesterday the US finally closed up, catching up with world indices after four days of dropping. Ironically, negative news on unemployment and decline in GDP was overlooked, and doesn't seem to be having an impact on Asia either. Neither did the news out of UK that British Banks will still be experiencing some trouble in the coming months. But evidiently, HSBC is getting some selling pressue at HK$65, down HK$0.85 (-1.29%).
For the third consecutive day, HSI has gone up above 20-day average, gaining everything that was lost last week. As I mentioned in my earlier blogs, HSI should continue to close up above 18,000, and prior to end of June as managers close their 2H books.
China Construction Bank (0939.HK)
Closing at HK$6.10, CCB has gone up far beyond my expected HK$6.00. News today that loans in June may have surpassed initial expectations brings positive optimism again. Perhaps this will be my first time I am starting to get concerned. Although long-term wise (over the next year), I still see CCB HK$6.70+, in the near-term (over the next month), growth should be limited (possibly only another ~1-2%) before a mild correction.
GOME Electrical Appliances (0493.HK)
Closing at HK$1.90, it's gone down quite a bit from it's high of HK$2.32 a couple of days ago. I don't see it jumping substantially in the short-term, but to hover around HK$1.80-1.99. I still remain very optimistic though, seeing its price to rise as high as HK$2.50 over the next year. If you think about it, at HK$1.90 you're really paying for HK$1.71 a share after subscribing to new shares (Remember: every 100 shares has the right to buy 18 new shares at HK$0.64). A price appreciation to HK$2.00 is a good 17% gain, HK$2.50 an even better gain of 46.2%.
Thursday, June 25, 2009
Thursday, 25 June 2009 (Update)
With Shanghai and Shenzhen markets overheating to their new highs, news came out today on another possible "thru-train" between Chinese (China) investors and Hong Kong Investors.
Similar to the initial rumours in 2007, during which time only residents of Tianjin would have been permitted to invest in Hong Kong H-shares, this time around, the news seems to indicated only residents within the Guangdong province would be permitted to invest directly into H-shares. At the same time, Hong Kong residents would also be permitted to invest directly in A-shares. Possibly to be enacted by 2010.
Whether this news is actual or not, there doesn't seem to be any reaction in the market. Hong Kong Stock Exchange (0388.HK) is up ~3%, but that can simply be explained by the overall market sentiment.
Will we get another deja-vu, with HSI jumping to 32,000 again?
Similar to the initial rumours in 2007, during which time only residents of Tianjin would have been permitted to invest in Hong Kong H-shares, this time around, the news seems to indicated only residents within the Guangdong province would be permitted to invest directly into H-shares. At the same time, Hong Kong residents would also be permitted to invest directly in A-shares. Possibly to be enacted by 2010.
Whether this news is actual or not, there doesn't seem to be any reaction in the market. Hong Kong Stock Exchange (0388.HK) is up ~3%, but that can simply be explained by the overall market sentiment.
Will we get another deja-vu, with HSI jumping to 32,000 again?
Thursday, 25 June 2009 (Pre-market Post)
Pre-market Summary
Much as expected, Asian markets should perform well today, despite the slight dip with the Dow overnight. Bernanke indicated in his Fed policy statement that they will keep rates at 0%-0.25%, much as what economists had predicted. He also came out to say that they also see the recession in the US economy easing, with financial markets performing much better over the past months. More so, inflationary worries were calmed when he suggested that they don't see that as a problem. Concerns over a possible interest rate hike towards the end of the year will mostly be pushed into 2010.
Warren Buffet also came out yesterday to comment on the general economy. He suggested that the market seems to have been better, but the US economy has not actually started recovering yet, rather the contraction has simply slowed.
HKMA continues to inject cash into its reserve, suggesting that capital continues to flow into the Hong Kong market, which should theoretically keep prices afloat.
Today's Watch List
China Construction Bank (0939.HK), very likely to close above HK$5.90 today, though resistance at HK$6.00 remains strong. They have entered into an agreement with Spanish bank Banco Santander to open up lending financial services to rural parts of China, following suit Citibank and HSBC Plc.
CHALCO (2600.HK), after world demand for Aluminum was raised yesterday, Chalco should also benefit from the news, following its American counterpart ALCAO's price jump of ~2%. This news comes out to contradict what Rio Tinto commented about world demand to fall 12% this year in early June.
Shall the HSI close above 18,000 today? Very likely.
Much as expected, Asian markets should perform well today, despite the slight dip with the Dow overnight. Bernanke indicated in his Fed policy statement that they will keep rates at 0%-0.25%, much as what economists had predicted. He also came out to say that they also see the recession in the US economy easing, with financial markets performing much better over the past months. More so, inflationary worries were calmed when he suggested that they don't see that as a problem. Concerns over a possible interest rate hike towards the end of the year will mostly be pushed into 2010.
Warren Buffet also came out yesterday to comment on the general economy. He suggested that the market seems to have been better, but the US economy has not actually started recovering yet, rather the contraction has simply slowed.
HKMA continues to inject cash into its reserve, suggesting that capital continues to flow into the Hong Kong market, which should theoretically keep prices afloat.
Today's Watch List
China Construction Bank (0939.HK), very likely to close above HK$5.90 today, though resistance at HK$6.00 remains strong. They have entered into an agreement with Spanish bank Banco Santander to open up lending financial services to rural parts of China, following suit Citibank and HSBC Plc.
CHALCO (2600.HK), after world demand for Aluminum was raised yesterday, Chalco should also benefit from the news, following its American counterpart ALCAO's price jump of ~2%. This news comes out to contradict what Rio Tinto commented about world demand to fall 12% this year in early June.
Shall the HSI close above 18,000 today? Very likely.
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