HKEX 0388

[winston]

DJ MARKET TALK: HKEx, Market Volume Hint Likely HSI Correction

1511 [Dow Jones] While HSI +1.0% at fresh 10-month high of 20,459.01, near-term profit-taking likely to set in soon. Index rising 9th day out of 11 sessions since July 13, for cumulative gains of 18.6%.

One cue tipping likely near-term correction is HKEx (0388.HK) not leading rally, instead stock down 0.2% at HK$144.60; HKEx tends to move ahead of HSI, benchmark index bucking downtrend today signals correction may be imminent. Another cue for likely correction is market volume, with HK$53.85 billion with about one hour of trade left, may not crack HK$80 billion mark like past 2 sessions.

Still, any correction unlikely huge, steep given still firm market sentiment, ample liquidity especially given BBMG (2009.HK) listing tomorrow

[winston]

HKEx tipped to see better days ahead

Local bourse operator Hong Kong Exchanges and Clearing (0388) could see a profit boost because of a reviving IPO market and improved sentiment, analysts said.

BNP Paribas yesterday raised HKEx's target price to HK$181.95, from HK$139.50 and kept its "buy" recommendation.

The French investment house's revised forecast is 62.5 percent above market consensus as it believes HKEx's current valuation does not factor in any upcoming sizable IPO nor a through train policy for mainland investors.

"We estimate the size of upcoming IPOs could reach US$45 billion (HK$351 billion), higher than in the IPO boom of 2006," BNP analyst Dominic Chan said.

China Minsheng Bank, China Pacific Insurance, AIA and Agricultural Bank of China could each raise between HK$20 billion and HK$136 billion, BNP says.

HKEx's earnings this year could be near last year's HK$5.066 billion, but may soar 24.6 percent in 2010 with turnover reaching HK$94 billion, it said. HKEx shares fell 2.9 percent to HK$142.10 yesterday in line with the general market.

KATHERINE NG, The Standard HK

[winston]

HKEx set to profit from busy days

Hong Kong Exchanges and Clearing (0388) is expected to announce on Wednesday that first-half profit improved on higher trading volume in the second quarter, analysts said.

Deutsche Bank tips a 46 percent rise in second quarter net profit for the operator of the local bourse, from the first three months, based on a 60 percent gain in market turnover.

Daily turnover from April to June averaged HK$70.8 billion, up from HK$44.7 billion in the first quarter.

But interim net income may post a half-on-half decline of 5 percent from the second half of 2008, due to sliding investment income on the low Hong Kong Interbank Rate and lackluster derivatives market sentiment, Deutsche Bank said.

HKEx's earnings in the first three months plunged 49 percent year-on-year to HK$834.2 million .

Deutsche Bank revised its target price upward to HK$128.70 from HK$87.30 and upgraded its rating from "sell" to "hold."

Macquarie expects HKEx's net income to surge 65 percent quarter-to-quarter to HK$1.38 billion. It sees daily market turnover at an average HK$83 billion in the second half.

"We expect better IPO momentum in the second half, but suffice to say, buoyant fund-raising activity has more to do with rising sentiment, and thus daily turnover," said Jemmy Huang at Macquarie who kept its "underperform" rating but raised the target price to HK$118 from HK$105. HKEx fell 3.5 percent to end at HK$142.40 on Friday.

MANDY LO, The Standard HK

[winston]

Bourse operator HKEx Q2 profit up 3 pct

HONG KONG, Aug 12 (Reuters) - Hong Kong Exchanges & Clearing (HKEx) (0388.HK) on Wednesday reported a 3 percent rise in second-quarter net profit, as improving trading volumes halted four quarters of shrinking earnings.

HKEx, which recently overtook CME Group (CME.O) as the world's largest exchange operator by market capitalisation, reported a net profit of HK$1.37 billion ($200 million) for the April-June period, compared with HK$1.32 billion a year earlier.

The result was roughly in line with a consensus forecast of HK$1.32 billion from four analysts polled by Reuters, and marked an improvement over the HK$834.24 million profit it reported for the first three months of 2009.

Average daily turnover, the key determinant of exchange revenue, swelled to more than HK$70 billion in the second quarter as confidence in an early turnaround in the Chinese economy took hold and fundraising activity picked up pace.

Shares in HKEx vaulted nearly 65 percent in the second quarter, far outstripping the 35 percent by the benchmark Hang Seng Index .HSI.

HKEx pipped regional rival Singapore Exchange (SGXL.SI) which reported a 0.9 percent increase in its June quarter earnings.

[winston]

Robust turnover boosts HKEx but earnings slide Katherine Ng, The Standard HK

Higher stock market turnover in the second quarter helped Hong Kong Exchanges and Clearing (0388) earn HK$2.2 billion in the first half - a 20 percent drop from last year.

Second-quarter net profit rose 3 percent from a year ago to HK$1.37 billion and was a 63.8 percent improvement from HK$834 million in the first three months of 2009. The bourse operator will pay an interim dividend of HK$1.84 per share, 26 percent lower than the HK$2.49 a year earlier. However, the payout ratio was kept at 90 percent.

Chief executive Paul Chow Man-yiu said if turnover in coming months remains at April-to-June levels, second-half earnings could surpass that of the first six months.

The second-quarter results were roughly in line with market estimates of HK$1.3 billion.

Daily average turnover in the first half was about HK$58.3 billion.

Chow said market turnover is key to results as 60 percent of revenue of HKEx, the largest listed exchange in the world by market capitalization, is related to it. "The only variables would be interest rates and the size of the corporate fund [an investment run by HKEx], which affect net interest income."

He said after stocks slumped in the first quarter, market sentiment improved and initial public offerings revived. To facilitate listing applications, HKEx will simplify application procedures and listing requirements.

It will accept financial statements audited by mainland firms and possibly remove the HK$50 million three-year profit threshold, he said.

Listing activity in the first half was slim with only 18 IPO candidates, 70 percent of them from the mainland.

Chow sees no immediate chance of H shares listing in Shenzhen as the yuan is not freely convertible. During the first half, the callable bull/bear contracts sector was the only one that rose, totaling 3,685 transactions, up 287 percent from same period last year.

The valuation of the Hong Kong market fell 13.5 percent to HK$14.15 billion from HK$16.35 billion last year. The stock dropped 3.88 percent to HK$146 yesterday.

[winston]

Not vested.

DJ MARKET TALK:UBS Tips "Disconnect" Between HKEx Price, Turnover

1139 [Dow Jones] STOCK CALL: UBS trims HKEx (0388.HK) target by HK$1 to HK$104 after trimming FY09 earnings forecast by 3% on weaker-than-expected 3Q turnover of HK$60.9 billion. Now forecasts FY09-11 EPS at HK$4.50, HK$4.90, HK$5.40 respectively, representing CAGR of 10%.

Keeps Sell call. "We appreciate that Hong Kong currently has high liquidity, but we continue to feel that there is a disconnect between what is priced into HKEx's shares and the reality of how this liquidity is impacting turnover on the exchange."

Source: Dow Jones Newswire

[winston]

DJ MARKET TALK: HKEx +0.4%; To Face S/T Selling Pressure - BNP; October 6

1531 [Dow Jones] HKEx (0388.HK) +0.4% at HK$135.30, lagging vs HSI's 0.9% rise, weak rebound following 4.1% fall month-to-date. Recently low trading volume of local bourse (HK$43.68 billion Monday) indicates lackluster trading interest from investors, with HKEx topping short-selling list at HK$226.49 million Monday.

While expecting stock "to face short-term selling pressure," BNP stays positive on HKEx medium-to-long-term. "HKEx remains one of our favorites, though the poor post-IPO share price performance of some second-tier companies at aggressive IPO pricing could drag HKEx's valuation for now, but this may change from the fourth quarter of 2009, with bigger China financials to list."

Tips upcoming IPOs in next 12 months worth of US$45 billion. Rates HKEx at Buy, target at HK$181.95.

Source: Dow Jones Newswire

[winston]

DJ MARKET TALK: HKEx +0.7%; But GuocoCapital Downgrades To Sell; Oct 6

1156 [Dow Jones] HKEx (0388.HK) +0.7% at HK$135.80, roughly inline with HSI's modest gains (+0.6%), small rebound after 8.7% loss over past 2 weeks. Still stock tops HK short-selling list recently, suggests it's likely to remain weak near-term, as average daily turnover of local bourse has turned lower recently.

GuocoCapital notes ADT decreased 14% from HK$70 billion in August to HK$60 billion in September, lowest since March. Yesterday's market volume further declined to HK$43.68 billion. Given bearish stance on HK's stock market in October, house cuts ADT forecast to HK$65 billion for 4Q and HK$62.2 billion for 2009 (previous forecast not provided); notes 2008 ADT was HK$72.10 billion.

House cuts HKEx 's FY09 earnings forecast by 4%. Downgrades stock to Sell from Hold, target revised to HK$119 (previous level not shown) based on 27X FY09 earnings.

Source: Dow Jones Newswire

[winston]

DJ MARKET TALK: BoA-ML Reinstates HKEx With Underperform Call, Sep 28

1101 [Dow Jones] STOCK CALL: BoA-ML reinstates HKEx (0388.HK) with Underperform call, HK$132 target; says stock looks expensive even with stretched assumptions.
House doesn't deny HKEx's strategy as China's international financial centre, but at over 26X 2010 estimated earnings, turnover lagging share price recovery, thinks HKEx's correlation with HSI could fade.

For share price turnover to correlate, requires either share price to fall by 30% or average daily turnover to surge by 50% from current level of HK$60 billion, sustain at HK$90 billion.

For that to happen, says HSI was required to stay at 25,000-level, which occurred for 4-month period in history, before Lehman's fall.

Source: Dow Jones Newswire

[winston]

Not vested. Ha Ha ... follow this guys at your own risk.

DJ MARKET TALK:GS Takes HKEx Off Conviction Buy,Cuts Target 18.5%

1025 [Dow Jones] STOCK CALL: Goldman Sachs removes HKEx (0388.HK) from Conviction Buy, but keeps Buy rating. Cuts target to HK$163 from HK$200 after lowering FY09-FY11 EPS estimates by 14%-28% as average daily turnover so far in 2H shows no significant upturn.

Says when HKEx added to Conviction Buy, estimated average daily turnover to return or surpass 2H07 levels on reasons including China, HK lead on macro, corporate recovery, low rates. But that didn't happen, likely due to debates over U.S., global recovery profile, outcome of exit strategies, sustainability of China stimulus, loan surge.

Source: Dow Jones Newswire