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.
Showing posts with label CCB. Show all posts
Showing posts with label CCB. Show all posts
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.
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 (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.
Wednesday, June 24, 2009
Wednesday, 24 June 2009 (Mid-day Post)
Summary
Hang Seng Index 17,771.75 (Change: +233.38/1.33%)
Range: 17,484.06 - 17,823.07
Turnover HKD30.209B
Hang Seng Index
Up across the board in Asia this morning, Tokyo's Nikkei +0.7%, Taiwan's Taiex +3.5%, Shanghai and Shenzhen also up +0.7% and +1.4%, respectively. Hong Kong's evidently following suit after yesterday's over-selling. Strong resistence at the 50-day average is keeping HSI afloat; however, turnover continues to remain low, which is a point to note and to worry. I fear subsequent to June, it might not be able to sustain it's position.
Rumour also has it that PBOC may lower the minimum reserve requirement for Chinese banks. This news is beneficial for financials of course, and should help boost up prices come this afternoon for H-shares. CCB (0939.HK) and ICBC (1398.HK) remain the favourites - worth watching how their prices should do - anticipating CCB to close ~HK$5.78 - 5.82, while ICBC should close ~HK$5.20 - 5.25.
Goldman Sachs also upgraded their target prices on China Life (2628.HK) and Ping An Insurance (2318.HK) to HK$32 and HK$62, respectively. Meanwhile Nomura also upgraded GOME Electronic Appliances (0493.HK) to HK$2.10.
Hang Seng Index 17,771.75 (Change: +233.38/1.33%)
Range: 17,484.06 - 17,823.07
Turnover HKD30.209B
Hang Seng Index
Up across the board in Asia this morning, Tokyo's Nikkei +0.7%, Taiwan's Taiex +3.5%, Shanghai and Shenzhen also up +0.7% and +1.4%, respectively. Hong Kong's evidently following suit after yesterday's over-selling. Strong resistence at the 50-day average is keeping HSI afloat; however, turnover continues to remain low, which is a point to note and to worry. I fear subsequent to June, it might not be able to sustain it's position.
Rumour also has it that PBOC may lower the minimum reserve requirement for Chinese banks. This news is beneficial for financials of course, and should help boost up prices come this afternoon for H-shares. CCB (0939.HK) and ICBC (1398.HK) remain the favourites - worth watching how their prices should do - anticipating CCB to close ~HK$5.78 - 5.82, while ICBC should close ~HK$5.20 - 5.25.
Goldman Sachs also upgraded their target prices on China Life (2628.HK) and Ping An Insurance (2318.HK) to HK$32 and HK$62, respectively. Meanwhile Nomura also upgraded GOME Electronic Appliances (0493.HK) to HK$2.10.
Monday, June 22, 2009
Monday, 22 June 2009 (After Market Post)
Summary
Hang Seng Index 18,059.55 (Change: +138.15/0.77%)
Range: 17,906.39 - 18,398.92
Turnover ~HKD62.685B.
Hang Seng Index
I got ahead of myself earlier this afternoon. I take back everything I said. HSI lacked the momentum to keep it's position, eventually closing slightly above 18,000. Below 10-day and 20-day moving average, and starting the week with low turnover again. Tomorrow, HSI should close back in the red, below 18,000.
Could it possibly be because of capital flowing into the IPOs? Possibly, I'm not going to rule that out. But considering how low the capitalization is by aggregate, I don't think it would really impact the market that much.
China Construction Bank (0939.HK)
Lagged a bit again today, only up HK$0.05 (+0.87%), with average Chinese banking stocks jumping ~2% (Bank of China, 3988.HK), to ~4.85% (Bank of Communications, 3328.HK). Reports that personal loans in China may have risen as much as RMB6.5 trillion, a positive sign for credit and lending.
One stock that I also recommend looking into more closely is GOME Appliances (0493.HK), a stock that has been suspending for the past seven months as a result of investigations into its CEO's corruption and market manipulation charges. Things seem to be clearing up and possibly released for trading again soon. And guess what, it's missed the rally we've all been watching, and as investors continue to seek out underpriced securities, this one looks to catch up. Will give this one some more thought.
Hang Seng Index 18,059.55 (Change: +138.15/0.77%)
Range: 17,906.39 - 18,398.92
Turnover ~HKD62.685B.
Hang Seng Index
I got ahead of myself earlier this afternoon. I take back everything I said. HSI lacked the momentum to keep it's position, eventually closing slightly above 18,000. Below 10-day and 20-day moving average, and starting the week with low turnover again. Tomorrow, HSI should close back in the red, below 18,000.
Could it possibly be because of capital flowing into the IPOs? Possibly, I'm not going to rule that out. But considering how low the capitalization is by aggregate, I don't think it would really impact the market that much.
China Construction Bank (0939.HK)
Lagged a bit again today, only up HK$0.05 (+0.87%), with average Chinese banking stocks jumping ~2% (Bank of China, 3988.HK), to ~4.85% (Bank of Communications, 3328.HK). Reports that personal loans in China may have risen as much as RMB6.5 trillion, a positive sign for credit and lending.
One stock that I also recommend looking into more closely is GOME Appliances (0493.HK), a stock that has been suspending for the past seven months as a result of investigations into its CEO's corruption and market manipulation charges. Things seem to be clearing up and possibly released for trading again soon. And guess what, it's missed the rally we've all been watching, and as investors continue to seek out underpriced securities, this one looks to catch up. Will give this one some more thought.
Friday, June 19, 2009
Friday, 19 June 2009 (After Market Post)
Summary
Hang Seng Index 17,920.930 (Change: +144.27/0.81%)
Range: 17,759.86 - 18,015.11
Turnover HKD62.906B.
Hang Seng Index
Would have preferred it if HSI closed above 18,000. It did break through a few times during the day, but failed to keep the momentum, closing eventually just under 80 points shy.
Breaking the first of a consecutive 4-day decline, I suppose investors are taking a sigh of relief as we enter into the weekend. I must emphasize that it may have to be a brief sigh, considering that today was not all that great of news. Momentum continued to be weak, while turnover fell again, closing the week just under HKD63B. The market still seems to lack direction and continues to hover around 17,700 and 18,000. I fear to believe that if HSI does not break through 18,000, together with continued low turnover, HSI may experience a further decline, possibly to the next resistence mark at the 50-day moving average, 16,843. (As of today, HSI's 10-day and 20-day moving averages stands at 18,398 and 18,138).
More negative news also comes from short trading activity. Today the amount jumped another 24.9% to HK$3.607B, accounting for 5.73% of total market turnover. Unless we see a strong change in direction from the US tonight, I fear another day in the red on Monday (and quite possibly the week), following suit the first two Monday's of the month.
China Construction Bank (0939.HK)
I just feel a bit obligated to mention briefly about this favorite of mine. Unfortunately, it did not close at the HK$5.60 mark that I suggested yesterday, but rallied again today, closing up HK$0.21 (3.79%) at HK$5.75. I did mention about the positive earnings expectations in my previous blog, so I'll mention a few other points:
1. Momentum continues to be strong (as is volatility), with turnover being at HKD7.091B, accounting for almost 11.3% of total turnover for the market.
2. FTSE Xinhua Index (新华富时指数) adjusted CCB to a larger proportional weighting, from 3.8% to 8.3%. As a result managers may need to follow-suit by increasing their funds' proportional share.
3. Relative to CCB A-shares, it is interesting to point out that A-shares also closed up another 4 cents to RMB5.91 (0.68%). To date, over the past month A-shares have rallied 28.2% while H-shares have only jumped 15.93%. Month-to-date, figures come to 25.48% and 10.79%, respectively. For the past three months, since the rally, H-shares have traded on an average premium to A-shares (after RMB/HKD conversion) at about 16.92% (YTD: 14.26%). As at today's close, this premium stands at only at 10.31%. Possibly room for another ~4-6% price appreciation.
4. CCB remains relatively lagged compared to HSI and HSCEI performance, with HSI and HSCEI up 36.48% and 35.94%, respectively, over the past three months, while CCB remains up only 30.98%. Possibly room for another ~4-5% price appreciation.
Evidently, I still have very positive views on CCB, targeting atleast the price of HK$6.00 before I decide to exit. However, with that said, it's also worth noting that with the market's overall lack of direction, together with a possible correction, CCB's price may very well follow suit. On top of that, of the short trade plays today, CCB also took part with ~HK$197.92 bet.
New IPOs for June
With the recent market rally, evidently comes the hype of new IPOs trying to ride the waves. In the pipeline before the month ends are:
1. 361 Degrees International Limited (01361.HK), a sporting apparel company in China, often compared to the country's two large players Anta (02020.HK) and Li Ning (02331.HK). Target IPO price in the range of HK$3.15 - 4.35 per share.
2. China Qinfa Group Limited (00866.HK), a coal-producing company in China, not state-controlled, but also not owning any coal mines either. Target IPO price in the range of HK$2.00 - 2.52 per share.
Going to look into these and talk more about my thoughts. One other IPO not yet open to the public yet is Ba Wang Herbal Shampoo, which recently launched pretty massive advertising campaigns (quiet lame) with Jackie Chan (thumbs down) as their spokes-person. So far, this one seems to be the market's favorite. Will add to this one as well.
Happy weekend.
Hang Seng Index 17,920.930 (Change: +144.27/0.81%)
Range: 17,759.86 - 18,015.11
Turnover HKD62.906B.
Hang Seng Index
Would have preferred it if HSI closed above 18,000. It did break through a few times during the day, but failed to keep the momentum, closing eventually just under 80 points shy.
Breaking the first of a consecutive 4-day decline, I suppose investors are taking a sigh of relief as we enter into the weekend. I must emphasize that it may have to be a brief sigh, considering that today was not all that great of news. Momentum continued to be weak, while turnover fell again, closing the week just under HKD63B. The market still seems to lack direction and continues to hover around 17,700 and 18,000. I fear to believe that if HSI does not break through 18,000, together with continued low turnover, HSI may experience a further decline, possibly to the next resistence mark at the 50-day moving average, 16,843. (As of today, HSI's 10-day and 20-day moving averages stands at 18,398 and 18,138).
More negative news also comes from short trading activity. Today the amount jumped another 24.9% to HK$3.607B, accounting for 5.73% of total market turnover. Unless we see a strong change in direction from the US tonight, I fear another day in the red on Monday (and quite possibly the week), following suit the first two Monday's of the month.
China Construction Bank (0939.HK)
I just feel a bit obligated to mention briefly about this favorite of mine. Unfortunately, it did not close at the HK$5.60 mark that I suggested yesterday, but rallied again today, closing up HK$0.21 (3.79%) at HK$5.75. I did mention about the positive earnings expectations in my previous blog, so I'll mention a few other points:
1. Momentum continues to be strong (as is volatility), with turnover being at HKD7.091B, accounting for almost 11.3% of total turnover for the market.
2. FTSE Xinhua Index (新华富时指数) adjusted CCB to a larger proportional weighting, from 3.8% to 8.3%. As a result managers may need to follow-suit by increasing their funds' proportional share.
3. Relative to CCB A-shares, it is interesting to point out that A-shares also closed up another 4 cents to RMB5.91 (0.68%). To date, over the past month A-shares have rallied 28.2% while H-shares have only jumped 15.93%. Month-to-date, figures come to 25.48% and 10.79%, respectively. For the past three months, since the rally, H-shares have traded on an average premium to A-shares (after RMB/HKD conversion) at about 16.92% (YTD: 14.26%). As at today's close, this premium stands at only at 10.31%. Possibly room for another ~4-6% price appreciation.
4. CCB remains relatively lagged compared to HSI and HSCEI performance, with HSI and HSCEI up 36.48% and 35.94%, respectively, over the past three months, while CCB remains up only 30.98%. Possibly room for another ~4-5% price appreciation.
Evidently, I still have very positive views on CCB, targeting atleast the price of HK$6.00 before I decide to exit. However, with that said, it's also worth noting that with the market's overall lack of direction, together with a possible correction, CCB's price may very well follow suit. On top of that, of the short trade plays today, CCB also took part with ~HK$197.92 bet.
New IPOs for June
With the recent market rally, evidently comes the hype of new IPOs trying to ride the waves. In the pipeline before the month ends are:
1. 361 Degrees International Limited (01361.HK), a sporting apparel company in China, often compared to the country's two large players Anta (02020.HK) and Li Ning (02331.HK). Target IPO price in the range of HK$3.15 - 4.35 per share.
2. China Qinfa Group Limited (00866.HK), a coal-producing company in China, not state-controlled, but also not owning any coal mines either. Target IPO price in the range of HK$2.00 - 2.52 per share.
Going to look into these and talk more about my thoughts. One other IPO not yet open to the public yet is Ba Wang Herbal Shampoo, which recently launched pretty massive advertising campaigns (quiet lame) with Jackie Chan (thumbs down) as their spokes-person. So far, this one seems to be the market's favorite. Will add to this one as well.
Happy weekend.
Thursday, June 18, 2009
Thursday, 18 June 2009 (Mid-day Post)
Summary
Hang Seng Index 17,728.080 (Change: -356.52)
Range: 17,655.82 - 18,069.76
Turnover ~HKD36.1B.
Hang Seng Index
Yesterday night, FedEx's poor outlook and gloomy earnings overshadowed the fact that inflation is still in check. Early signs that may suggest the need for a rumored interest rate hike by 25 basis points as early as November may not be called for. Indeed this should be a good sign for equity markets. But after so many good economic news, the expectations may have already been priced into the market, and negative news is prevailing. HSI is following suit, opening in the negative territory, as did the Nikkei and Straits Times.
Not good, not good indeed, closing down significantly by mid-day, dropping as low as -400 points, it may be pretty difficult for the HSI to recover back to safety (and many investors' psychological mark) at 18,000 during afternoon trading. If this remains true, this will be the fourth consecutive day drop, and the first time since the rally in early March. Two more negative indicators include:
1. HSI has fallen through its 10-day and 20-day moving average. Meaning short-term trends have already followed the bear route.
2. Turnover up to this point is has been the lowest since March, exceeding Monday's first and record low turnover.
Re-affirming yesterday's thought, China A-shares continue to rally, reaching its one-year high and up ~1%. Let's see how HSI goes after opening bell this afternoon, although I don't think it would be much better.
China Construction Bank (0939.HK)
First time since its rally, CCB is following HSI closing down ~2.2% to HK$5.55. Conversely, CCB's A-shares (612939.SH) closed up ~6% to RMB5.90 (+0.32), now trading at a premium to its fellow H-shares.
My thoughts? At HK$5.50-0.55 (mid-day HK$5.54), CCB remains a very attractive investment for short, mid and long-term. It seems to have finally given in to the overall market sentiment. However, turnover for this one continues to remain strong, almost ~HK$2B by mid-day. Quite possibly, it should recover back to HK$5.60-$5.65 by the day closing bell.
Hang Seng Index 17,728.080 (Change: -356.52)
Range: 17,655.82 - 18,069.76
Turnover ~HKD36.1B.
Hang Seng Index
Yesterday night, FedEx's poor outlook and gloomy earnings overshadowed the fact that inflation is still in check. Early signs that may suggest the need for a rumored interest rate hike by 25 basis points as early as November may not be called for. Indeed this should be a good sign for equity markets. But after so many good economic news, the expectations may have already been priced into the market, and negative news is prevailing. HSI is following suit, opening in the negative territory, as did the Nikkei and Straits Times.
Not good, not good indeed, closing down significantly by mid-day, dropping as low as -400 points, it may be pretty difficult for the HSI to recover back to safety (and many investors' psychological mark) at 18,000 during afternoon trading. If this remains true, this will be the fourth consecutive day drop, and the first time since the rally in early March. Two more negative indicators include:
1. HSI has fallen through its 10-day and 20-day moving average. Meaning short-term trends have already followed the bear route.
2. Turnover up to this point is has been the lowest since March, exceeding Monday's first and record low turnover.
Re-affirming yesterday's thought, China A-shares continue to rally, reaching its one-year high and up ~1%. Let's see how HSI goes after opening bell this afternoon, although I don't think it would be much better.
China Construction Bank (0939.HK)
First time since its rally, CCB is following HSI closing down ~2.2% to HK$5.55. Conversely, CCB's A-shares (612939.SH) closed up ~6% to RMB5.90 (+0.32), now trading at a premium to its fellow H-shares.
My thoughts? At HK$5.50-0.55 (mid-day HK$5.54), CCB remains a very attractive investment for short, mid and long-term. It seems to have finally given in to the overall market sentiment. However, turnover for this one continues to remain strong, almost ~HK$2B by mid-day. Quite possibly, it should recover back to HK$5.60-$5.65 by the day closing bell.
Wednesday, June 17, 2009
Wednesday, 17 June 2009 (After Market Post)
Summary
Hang Seng Index 18,084.60 (Change: -80.90)
Range: 17,833.770 - 18,255.131
Turnover HKD74.482B.
Hang Seng Index
Another day in the red for the Hang Seng Index, making it the consecutive third day drop. Seeing lows as much -330 points in early morning trading, but maintaining its strong resistance point at 18,000, eventually to close the day above this mark again.
Its interesting to point out that since the rally in early March 2009, this has only been the second time that the Hang Seng Index dropped three days in a row. The first time dating back just under a month ago on May 19 when HSI dropped from 17,544 to 17,062 (-2.75%, 482 points) on May 22. The subsequent week after a slight uptick, HSI dropped further to 16,992 only to rally to 17,885 the next day on May 27 (5.25%, 893 points).
Total turnover dropping to only 74.5B HKD (Volume: 2,914,147,800), possibly suggesting a lack of incentives for investors to get in, or that prices still are not attractive enough to warrant buying.
The HSI has been very volatile these past couple of weeks. Unable to break through the 19,000 marks, but yet having strong resistance from falling below 18,000. Chinese A-shares closed up as investors started to digest the fact that new IPOs may be coming up after they were frozen for 9-months by the exchange. The first thought that comes to mind is the fact that funds may flow back up to A-shares, given historically IPOs have performed better in short-term. Putting it blatantly, it's not good for the HSI, at least in the near run.
China Construction Bank (0939.HK)
A strong favorite of mine. Last Monday when CCB closed at 5.10, their performance lagged relative to the HSCEI, HSI and even fellow Chinese banks like ICBC (1398.HK). Considering how CCB is correlated very closely to HSCEI and ICBC ~0.90. HSCEI and ICBC both rallied by over 50% over the past three months, while CCB only rose approximately 28%-29%. Mostly in part due to nervous investors awaiting Bank of America's unloading of their shares in early April. Though 1Q NIM also shrank down to ~2.58%, I expected this to be the lowest range and that 2Q would either hover around the same mark or higher. Interestingly, after meeting with an equity analyst last week, my thoughts were confirmed. NIM is expected to improve for 2Q with management's tighter control on costs CCB's earnings should turn out quite well. Of course, this is yet to show. So why the rally last week after the long month's wait? Well, according to the analyst, there was a meeting with some of the top hedge fund managers last Monday (the day before the rally) together with executives from the banks. Tuesday morning and the days following we saw the rally. One after another, banks have raised their target price and upgraded CCB to outperform, overweight, etc.
Hang Seng Index 18,084.60 (Change: -80.90)
Range: 17,833.770 - 18,255.131
Turnover HKD74.482B.
Hang Seng Index
Another day in the red for the Hang Seng Index, making it the consecutive third day drop. Seeing lows as much -330 points in early morning trading, but maintaining its strong resistance point at 18,000, eventually to close the day above this mark again.
Its interesting to point out that since the rally in early March 2009, this has only been the second time that the Hang Seng Index dropped three days in a row. The first time dating back just under a month ago on May 19 when HSI dropped from 17,544 to 17,062 (-2.75%, 482 points) on May 22. The subsequent week after a slight uptick, HSI dropped further to 16,992 only to rally to 17,885 the next day on May 27 (5.25%, 893 points).
Total turnover dropping to only 74.5B HKD (Volume: 2,914,147,800), possibly suggesting a lack of incentives for investors to get in, or that prices still are not attractive enough to warrant buying.
The HSI has been very volatile these past couple of weeks. Unable to break through the 19,000 marks, but yet having strong resistance from falling below 18,000. Chinese A-shares closed up as investors started to digest the fact that new IPOs may be coming up after they were frozen for 9-months by the exchange. The first thought that comes to mind is the fact that funds may flow back up to A-shares, given historically IPOs have performed better in short-term. Putting it blatantly, it's not good for the HSI, at least in the near run.
China Construction Bank (0939.HK)
A strong favorite of mine. Last Monday when CCB closed at 5.10, their performance lagged relative to the HSCEI, HSI and even fellow Chinese banks like ICBC (1398.HK). Considering how CCB is correlated very closely to HSCEI and ICBC ~0.90. HSCEI and ICBC both rallied by over 50% over the past three months, while CCB only rose approximately 28%-29%. Mostly in part due to nervous investors awaiting Bank of America's unloading of their shares in early April. Though 1Q NIM also shrank down to ~2.58%, I expected this to be the lowest range and that 2Q would either hover around the same mark or higher. Interestingly, after meeting with an equity analyst last week, my thoughts were confirmed. NIM is expected to improve for 2Q with management's tighter control on costs CCB's earnings should turn out quite well. Of course, this is yet to show. So why the rally last week after the long month's wait? Well, according to the analyst, there was a meeting with some of the top hedge fund managers last Monday (the day before the rally) together with executives from the banks. Tuesday morning and the days following we saw the rally. One after another, banks have raised their target price and upgraded CCB to outperform, overweight, etc.
Luckily, I got in when it was still at the 4.90 price range, and kept holding on expecting the rally. I still have not cashed in, simply because I believe there is still potential for its price appreciation. Firstly, after three consecutive days of HSI decline, CCB has not only been able to hold its price, but has continued to rise (of course, the pre ex-dividend price jump led to yesterday's close at 5.71). Today, opening at 5.63, it closed up another ~2% to 5.69. Secondly, although CCB has performed quite well over the past week, note that imperically with positive "news", the stock price will continue to trade at a premium until earnings are released confirming the market news.
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