HKEX 0388

Re: HKEX 388

Postby winston » Wed Aug 10, 2016 4:57 am

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Big tumble looms at HKEx

by Daisy Wu

Analysts expect half-year profit for Hong Kong Exchanges and Clearing (0388) to have tumbled by 50 percent compared to the first six months of last year when interim results are revealed today.

The market operator has already made it known that average daily market turnover slid 46 percent to HK$67.5 billion from 12 months earlier while total funds raised from initial public offerings plunged 66 percent to HK$43.6, with the number of IPOs down by 11 to 40.

Daniel So Pui-fung, a strategist at China Merchants Bank International, said support from the London Metal Exchange to the bottom line of HKEx could not offset the declines. HKEx is the majority owner of the LME.

Also, the London exchange unveiled a package of measures to "strengthen its role as the global liquidity center for metals trading."

There are several components, including reducing charges for position transfers and lowering initial margin rates. The attention grabber, though, is a cut in fees for what the LME terms "short-dated carries," which means anything from a following business day to 15 calendar days on.

And the LME with the World Gold Council and a group of banks and trading firms is starting a venture called LMEprecious, which will introduce centrally-cleared gold and silver contracts in 2017 first half.

Source: The Standard
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Re: HKEX 388

Postby winston » Wed Aug 10, 2016 1:16 pm

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HKEx First-Half Profit Tumbles 25% As Trading Halves

By Shuli Ren

Investors are not trading enough stocks and it is showing up in Hong Kong Exchange & Clearing‘s (388.Hong Kong) first-half earnings.

Earnings before interest, taxes, depreciation and amortization fell 25% from a year ago to $3.9 billion, said the exchange in a filing. Most of it came from the top-line. Revenue fell 18% to $5.6 billion.

Average daily trading of equity products on the Hong Kong bourse halved in the last year to $48.3 billion, even though the Hang Seng Index is down only 8% from a year ago.

Profit margin at HKEx fell 7 percentage points to 70%, “reflecting the decline of trading income”, noted the exchange.

HKEx said it already completed the “development and testing of the required systems” for the much-anticipated Hong Kong Shenzhen Connect, and is only “subject to regulatory approval.”

Despite the slumping trading volume, the Hong Kong bourse still trades at a daunting 30 times earnings. This is because HKEx is on the benchmark Hang Seng Index, traders say.

Source: Barron's Asia

http://blogs.barrons.com/asiastocks/201 ... ng-halves/
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Re: HKEX 388

Postby winston » Thu Aug 11, 2016 8:20 am

HKEx profit tumbles amid weak market

by Daisy Wu

Hong Kong Exchanges and Clearing Ltd (0388) said first half to June net profit fell by 27 percent year-on-year to HK$2.99 billion due mainly to a significant drop in fees from trading, clearing and settlement of securities.

Trading fees and tariff fell sharply to HK$2.26 billion from HK$2.94 billion a year earlier, while clearing and settlement fees plunged to HK$1.19 billion from HK$1.68 billion.

The local bourse operator slashed interim dividend by 28 percent year-on- year to HK$2.21 per share to maintain a dividend payout ratio of 90 percent of its net profit. Basic earnings per share slid to HK$2.47.

Its share price fell 0.98 percent to HK$192.10 yesterday.

Chief executive Charles Li Xiaojia said he expects profit in the second half to be subdued compared with a high base last year. He said he does not see any significant catalyst that will boost local stock market activity.

On the contrary, the local market may be subjected to volatility in the second half due to global turbulence, he said.

He said the exchange will defer less critical projects and it has reduced planned headcount increases as it seeks to keep costs under control. The cost control measures will be revised in line with changes in trading conditions in the second half.

Earnings before interest expenses, taxation, depreciation and amortization declined by 25 percent to HK$3.94, with the EBITDA margin narrowing by 7 percentage points to 70 percent.

HKEx attributed the EBITDA drop to a 37 percent fall in cash equity to HK$1.01 billion, as the average daily turnover of the local cash market was 46 per cent lower, or HK$67.5 billion, than the record high of HK$125.3 billion in the first half of last year.

Revenue from the Shanghai-Hong Kong stock connect program fell by 38 percent year-on-year to HK$71 million.

He said the problem with the limited quota of 48.3 billion yuan (HK$56.48 billion) may be resolved when the Shenzhen-Hong Kong stock connect comes on stream.

Source: The Standard
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Re: HKEX 388

Postby winston » Thu Aug 11, 2016 8:22 am

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Hong Kong Exchanges and Clearing's (0388) interim report showed net profit fell 27 percent to nearly HK$3 billion from the first six months of last year.

The stock fell 1 percent to HK$192.10. Morgan Stanley expected HKEX's share price to underperform as it is trading at over 40 times its 2016 price-earnings ratio. It reiterated an underweight rating with a target price of HK$140.

Well, the slump in profit was expected.

January to June last year was a bold era for mainland stocks, which substantially drove up turnover of the Hong Kong stock market as well.

Dr Check still thinks HKEx is worth a higher PE due to its monopoly and any dip below HK$190 is a good bargain.

Source: Dr Check, the Standard
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Re: HKEX 388

Postby winston » Mon Sep 12, 2016 10:51 am

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Why HKEx Is A Sell Even With Mainland Money Inflow

By Shuli Ren

Hong Kong Exchange & Clearing (388.Hong Kong) has soared 7.6% this month as more mainland investors are buying Hong Kong stocks through the Hong Kong Shanghai Connect.

In addition, propelling this stock’s momentum was an announcement last Thursday that China’s massive insurance companies are now allowed to invest in Hong Kong stocks through the Connect.

As this blog noted on Friday, mainland investors are now more prominent in the Hong Kong stock market. As of the end of 2015, they held 9% of the cash equity trading at the exchange. For details, see my Friday blog “How Much Money Will China Insurers Pour Into Hang Seng?“.

However, mainland money by itself is not enough, because Hong Kong is still a very international market. European and U.S. investors combined doubled mainland investors’ cash equity business last year.

Deutsche Bank‘s Sukrit Khatri, who has a Sell rating on HKEx, wrote this morning:

Although similar regulations will help sentiment, the pace of inflows could be more gradual. Even in August, when SB ADT reached a year-high of HK$4.13bn, it contributed just 6% of HKEx’s ADT...

However, it is unlikely that mainland investors will drive up HK volume yet. For ADT to reach HK$70bn (our estimate), SB ADT needs to triple its August runrate, i.e. gross turnover needs to be HK$13bn every day for the rest of the year. We do not think this regulation has done enough to bring about this impetus.

Despite the considerable SB volume surge in July-August, absolute ADT is down 16% ytd, to HK$2.9bn, vs. a 37% drop in non-SB volume, to HK$64bn, explaining SB’s rising contribution to 4.2% of HKEx’s ADT, from 3.2% in 2015.

In Khatri’s view, the bigger issue with HKEx is that there are not enough Chinese products to keep foreign investors, who are still bigger than mainland money, interested. In other words, mainland money inflow is not enough.

Deutsche has a price target of 149 Hong Kong dollars. HKEx tumbled 2.7% to HK$204 as part of the Hang Seng sell-off today. Deutsche’s price target implies another 27% downside.

Source: Barron's Asia

http://blogs.barrons.com/asiastocks/201 ... ey-inflow/
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Re: HKEX 388

Postby winston » Mon Sep 12, 2016 3:29 pm

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<Research Report>Deutsche: HKEX Kept Sell as HK Stocks Dominated by Non-Southbound Trading

Deutsche Bank, in its report, said after CIRC regulation allowed insurance funds access to Shanghai-Hong Kong Stock Connect, the share price of HKEX (00388.HK) climbed quite a lot.

Although this is a positive for the long term for China connectivity, the near-term impact through Southbound trading is still limited.

As the average daily turnover (ADT) of HKEX is still dominated by non-Southbound trading (96% of total), the broker believed that lack of participation from overseas investors is the main risk to HKEX's strategy and earnings growth, and the broker continued to rate the stock Sell with target price of $149.

Although the amount of Southbound capital increased considerably in July-August, the ADT has fell 16% year-to-date to $2.9 billion, and the non-Southbound turnover fell 37%, making the proportion of Southbound trading rising from 3.2% in 2015 to 4.2%.

The growth in Southbound trading volume are believed to be the result of the attractiveness of HKD-/USD-denominated companies in a depreciating RMB environment, and the chase for a dividend yield.

Source: AAStocks Financial News
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Re: HKEX 388

Postby winston » Wed Sep 21, 2016 1:49 pm

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<Research Report>HSBC: Southbound Capital Lifts Stock Turnover; Raises HKEX Target to $230

HSBC, in its report, said the average daily turnover (ADT) in Hong Kong has increased from $68 billion in August 2016 to $79 billion month-to-date (to 19 September).

On 9 September, the ADT even reached $117 billion, stimulated by Southbound trading. However, the high turnover is not a one-off; HSBC expected ADT exceeding $110 billion as the new normal for this market, and said turnover momentum may strengthen after the Shenzhen-Hong Kong Stock Connect is launched.

HSBC believed that compared with April 2016, the turnover growth this time could be more sustainable as it is supported by a paradigm shift of Hong Kong?s investor structure in the long term.

HSBC expected the proportion of Chinese investors to go up to 15% after the launch of the Shenzhen-Hong Kong Stock Connect, providing a sustained uplift to the market?s liquidity profile.

Besides Shenzhen-Hong Kong Stock Connect, HSBC believed that A-share ETF could be the next major business driver of HKEX. London-Hong Kong Connect, LME precious metal contracts and the spot commodity trading platforms in Shenzhen are also worth of close monitoring.

HSBC lifted its profit estimate on HKEX by 4% in 2017 with rating Buy and target price lifted from $210 to $230.

Source: AAStocks Financial News
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Re: HKEX 388

Postby winston » Fri Sep 23, 2016 1:56 pm

Sept 14, 2016

Research Report>G Sachs Upgrades HKEX to Neutral with Target Lifted to $195


Goldman Sachs upgraded HKEX(00388.HK) to Neutral from Sell and substantially lifted the target price by 332% to $195 from $148, which is equivalent to 34x P/E.

The research house said that the turnover of Hong Kong bourses saw a rise recently, showing that such increase was triggered by better flow.

In addition, investors hope to buy Hong Kong shares and now that China insurers are allowed to invest through stock connect.

The 2016-2018 EPS forecast was raised by 1%, 10% and 14% to $5.01, $5.74 and $6.61 respectively.

Source: AAStocks Financial News
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Re: HKEX 388

Postby winston » Wed Sep 28, 2016 11:16 am

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Charles Li: Annoucement of SZ-HK Connect to Be Made in Early Nov at Earliest

HKEX (00388.HK) CEO Charles Li said the preparation for Shenzhen-Hong Kong Stock Connect has almost finished, and the details will be disclosed in a few days for brokers and members to prepare.

All details will be reviewed again in the coming few weeks, and he hoped that announcement related to Shenzhen-Hong Kong Stock Connect can be made by early November at the earliest.

Source: AAStocks Financial News
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Re: HKEX 388

Postby winston » Tue Oct 11, 2016 6:54 pm

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Hong Kong Exchanges & Clearing Ltd announces agreement to establish Shenzhen-Hong Kong stock connect

* Says agreement to establish shenzhen-hong kong stock connect

* Units of hkex, entered into agreement with shenzhen stock exchange and china securities depository and clearing corporation

* trading & clearing fees arising from shenzhen-hk stock connect will be shared equally between szse & sehk & between chinaclear & hkscc Source text for Eikon: Further company coverage

Source: Reuters
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