HKEX 0388

[winston]

DJ MARKET TALK: HKEx Likely To Fall On Weak Earnings Outlook

0813 [Dow Jones] HKEx (0388.HK) likely to fall to track anticipated broad market weakness; while psychological support at HK$50 probably won't be troubled today, likely tested in short term. Despite FY08 results coming in slightly above view, most analysts stay bearish on stock due to weak earnings outlook; Kim Eng says 1Q09 likely to be 5th consecutive quarter of ADT decline, year-to-date ADT around HK$43 billion close to house's estimate of HK$45 billion for FY09; under this ADT assumption, FY09 EPS estimate at HK$3.35 (vs Thomson Reuters tipping HK$3.27), putting HKEx at 17X forward earnings based on yesterday's close of HK$56.85, down 4.6%, which unattractive given bearish market environment

[winston]

DJ MARKET TALK: HKEx Down 2.4% But JPMorgan Tips L/T Attraction

1030 [Dow Jones] HKEx (0388.HK) down 2.4% at HK$55.50, underperforming vs HSI's 1.2% fall on weak earnings outlook. Volume modest at HK$95.4 million, early low of HK$54.95 may be immediate support.

JPMorgan weighs long-term vs short-term view, says bearish case on HKEx is simply arguing further contraction in ADT, but for investors willing to look beyond current trough, stock remains attractive long term given simple business model with high operating leverage, structural angle relating to potential investments from China, stable dividend policy of 90% payout. Keeps Neutral call, HK$55 target price.

[winston]

DJ MARKET TALK: HKEx Down 3.1%; Goldman Advises Trading In Range

1504 [Dow Jones] HKEx (0388.HK) down 3.1% at HK$55.10, underperforming HSI's 1.4% fall, amid another day of lackluster trade with full-day volume again set to remain below HK$40 billion mark. Goldman Sachs advises investors to trade stock in HK$46-HK$78 range based on bottom-up worse-, better-case market volume; house removes stock from Conviction Sell, upgrades to Neutral from Sell, raises target price to HK$58 vs HK$52.

House's investment case on HKEx is still poor near-term turnover outlook, but solid company, with tight P&L management/resilience, nil MTM or bank NPL risks, good over 5% dividend yields.

Advises investors to trade range as "stock remains a key and volatile trading proxy for debates over timing of Hong Kong stabilization and recovery, including China stimulus program benefits."

[winston]

DJ MARKET TALK: HKEx Down 1.6% On Pft-Taking; Citi Keeps At Sell

1104 [Dow Jones] HKEx (0388.HK) down 1.6% at HK$65.30, on profit-taking after rising 21.5% over past 5 sessions, as bourse operator supported by gains in overall market (+14.4% in same period). Citigroup says overall market volume has been down for 9 consecutive months, with February average daily turnover (ADT) down 52% on-year at HK$40 billion, and 16% on-month.

Total market capitalization at HK$93 trillion end-February, or 49% decline on-year and 3% on-month. "The current stock price implies an ADT of around HK$30 billion, which we view as fair," says Citigroup. Keeps at Sell, target HK$60.10. Early low of HK$64.50 as immediate support

[winston]

WEN WEI PO

-- The Hong Kong bourse's average daily turnover in the first quarter fell 55 percent from a year-earlier to HK$44.72 billion.

[winston]

DJ MARKET TALK: HKEx Down 3.9% Pre-Mkt; MS Keeps At Underweight

0945 [Dow Jones] HKEx (0388.HK) down 3.9% at HK$83.50 at pre-market, as overall market set to fall, with consolidation in stock not surprising after 18.6% rise vs end-March level. "This stock amplifies market moves in both directions, and near-term performance will depend on market moves -- and is thus difficult to predict.

However, from a longer-term perspective, we maintain our Underweight view," Morgan Stanley says. In base case scenario, tips average daily turnover of local bourse at HK$37 billion for 2009.

Keeps target at HK$33.00. 10-day moving average of HK$78.42 as strong support near-term

[winston]

DJ MARKET TALK: HKEx +2.0%; Volume Likely Won't Sustain-Fulbright

1233 [Dow Jones] HKEx (0388.HK) +2.0% at HK$89.55, likely supported by short-covering, with more downside expected after trading volume in local bourse tapers off to HK$52.61 billion Thursday, lowest in more than 2 weeks. Francis Lun at Fulbright says HKEx likely to fall to HK$80.00 in near-term, as trading above HK$90.00 (intraday high at HK$91.00, likely an immediate cap) is "unjustified."

Adds, "It's better to sell the stock, as trading volume of the local bourse is unlikely to sustain at its recently high levels."

[winston]

DJ MARKET TALK:CIMB Cuts HKEx To Neutral, But Raises Target 25.3%

1211 [Dow Jones] STOCK CALL: CIMB downgrades HKEx (0388.HK) to Neutral form Outperform following 44% share price run-up since upgrade in early March; still, raises target price to HK$87.30 from HK$69.70, as increases FY09-11 earnings forecasts by 25%-30% to factor in higher market turnover, derivative volumes.

Notes faster-than-expected rebound in market turnover predominantly due to high velocity, although increase in market capitalization also helps. House expects HKEx shares to take breather as broad market consolidates in near term; current high velocity also at risk. Tips stock's risk/return profile "will be much more attractive" around HK$70. HKEx +3.0% at HK$90.40

[winston]

Turnover on the exchange picked up pace, climbing to a daily average of HK$65 billion so far in April from under HK$45 billion in the first quarter of 2009.

[winston]

ADT has greatly improved ....

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HKEx Q1 net dives 49 pct as stock trading shrinks

HONG KONG, May 13 (Reuters) - Hong Kong Exchanges & Clearing (0388.HK), Asia's largest listed bourse operator, on Wednesday said its first-quarter earnings fell 49 percent on lower trading volumes and fee income as the global financial crisis pummeled stock values and damped investor interest.

HKEx said it earned HK$834.24 million ($107.6 million) in the January-March period, down from HK$1.65 billion a year earlier, marking its fourth consecutive quarterly profit decline.

The numbers lagged behind two analysts' forecasts for HK$891 million and HK$918 million.

HKEx did worse than its rival Singapore Exchange (SGXL.SI), which reported a 46 percent drop in third-quarter profit, hurt by lower trading volumes and a dearth of new share issues.