InvestIdeas

In Hong Kong, the recent 6% correction (from Nov 17 high to Dec 17 low) has brought the stocks under our coverage to levels which are attractive to position for better earnings in 2018.

We have BUY ratings on China Merchants Port (144 HK), China State Construction International (3311 HK), COSCO Shipping Ports (1199 HK), CSPC Pharmaceutical (1093 HK), Fosun International (656 HK), KWG Property (1813 HK) and Longfor Properties (960 HK).

Source: OCBC

Chart of the day: Widening price differentials

by Zhang Shidong

Even a 36 per cent rally in Hong Kong’s Hang Seng Index this year has failed to narrow the price gap of the Chinese companies that trade both in the city and China.

The Hang Seng AH Premium Index finished at 129.88 on Thursday, compared with its last close of 122.35 in 2016. That means China-traded shares are now almost 30 per cent more expensive than their Hong Kong-listed counterparts.

One reason might be that dual-listed companies are lagging Chinese firms while companies only listed in Hong Kong such as Geely Automobile Holdings and Tencent Holdings are the leading annual gainers on the Hang Seng Index.

Among dual-listed firms, Anhui Conch Cement is the only one whose mainland-listed equities are cheaper than their Hong Kong peers.

Luoyang Glass has the widest premium, with the domestic equities almost six times as expensive as the Hong Kong stock.

Source: SCMP

http://www.scmp.com/business/markets/ar ... ferentials

No one saw this bull coming, so does Hang Seng Index have the legs to keep running in 2018?

Hang Seng Index has the strongest annual growth since 2009 while most analysts expect it can break historical record in the first half - but analysts have mixed view on the way ahead

Capital from Shenzhen: 4.46b yuan (US$682m) in the first 10 months, 6.6% of the turnover.

Source: SCMP

http://www.scmp.com/business/companies/ ... -legs-keep

China to trial converting non-tradeable, HK-listed stock into free-floating shares

by Xie Yu

The China Securities Regulatory Commission (CSRC) told a press conference in Beijing, that the so-called H-share companies can apply to participate in the pilot scheme, and the CSRC will select up to three qualified companies in the initial stage.

The move is made to “improve direct financing for companies, and support integrating Hong Kong into the national development”, a press release issued by CSRC said.

Under current rules, shares held by founders or major shareholders of Hong Kong-listed mainland firms are not eligible for trading on exchanges.

Analysts said the scheme would potentially increase share supply in the Hong Kong market, weighing on valuations, but it may also help boost turnover on the Hong Kong exchange.

Source: SCMP

http://www.scmp.com/business/banking-fi ... stock-free

Citi sounds a discordant note as it expects Hang Seng Index to drop to 29,500 by 2018 year end

A shares are expected to outperform Hong Kong stocks, helped by MSCI’s inclusion of mainland listed stocks in its key index

Citibank anticipates the benchmark Hang Seng Index to fall to 29,500 by the year end, down 3 per cent from the current level, citing tightening global monetary rates and unpredictable geopolitical risks as the biggest threats.

By sector, Hong Kong banks and Macau casinos could outperform.

Source: SCMP

http://www.scmp.com/business/markets/ar ... rop-295000

Chart of the day: H shares back with a bang

by Nicole Elliott

The Hang Seng China Enterprises Index futures contract retreated slightly in the first two weeks of December, only to find support from the Fibonacci 61 per cent retracement level, the 26-week moving average and the trend line taken from the low in February 2016.

Now on these first few days of trading in 2018, it has seen considerable follow-through and looks set to retest last year’s high of 12,095 points, in turn the highest level since the rather dramatic slide in the second week of September 2015.

All aspects of the weekly Ichimoku cloud charting system are positive, which ought to see the neat bullish trend that started two years ago continue, maybe for the first half of this calendar year.

Source: SCMP

http://www.scmp.com/business/markets/ar ... -back-bang

Hong Kong stock rally gains momentum from China share reform

by Michelle Chen

“In the first half of this year, the Hang Seng Index will continue to test record highs and will have the chance to rise to 34,000-35,000 points,” said Ben Kwong, chief operating officer at securities firm KGI Asia in Hong Kong.

However, it may fall back to the 30,000-32,000 level in the second half as higher interest rates and an expected stronger U.S. dollar trigger profit-taking.

Southbound fund flows have increased since the stock connect schemes that link Shanghai and Shenzhen to Hong Kong markets were launched in 2014 and 2016, respectively. Total net inflows to the Hong Kong market have climbed to around 12 percent of daily turnover.

“We will probably see southbound trading reach more than 15 percent, or even 20 percent of Hong Kong’s market turnover in mid-2018”.

“A big risk in the second half is the yuan may depreciate, which will cause capital outflows. If that happens, Chinese regulators may take measures to avoid fund outflows and funds flowing into Hong Kong will fall”.

Source: Reuters

https://www.reuters.com/article/us-chin ... SKBN1EU0KM

Chart of the day: Lunar New Year hope for CSI 300

by Nicole Elliott

A month ago, we wrote that the CSI 300 Index in China had more bullish momentum than might be expected and it was on track to rally to our second target at 4,400 points around the end of the year if it could hold above the 26-week moving average.

Although this has not happened, the gauge still managed a weekly close above the top of the trend channel and hit the highest level since June 2015.

Volume over the past month, is above average while observed volatility remains subdued.

We have slightly redrawn the very steep trend line and, while staying above this level, we hope the index will reach our target by the Lunar New Year.

Source: SCMP

http://www.scmp.com/business/markets/ar ... pe-csi-300

Hong Kong Stocks' Different Beast

By Shuli Ren

Source: Bloomberg

https://www.bloomberg.com/gadfly/articl ... ong-stocks

Enjoy the market madness as we edge toward meltdown

by Andrew Wong

I am confident in the first half of year that the Hang Seng Index will challenge 38,000 to 42,000 points.

But the likelihood that the dollar will bottom out in the second half is really unfortunate and Asia Pacific is bound to experience a financial crisis.

The dollar debt issuance in Asia last year reached US$377 billion (HK$2.94 trillion).

Source: The Standard

http://www.thestandard.com.hk/section-n ... 0122&sid=2