HK - Market Direction 01 (Jan 12 - Jul 15)

[winston]

The next upside target is seen at 20,975-21,017, the highs reached in September and August last year, respectively.

Market watchers said that while they see some more room to go in this rally, it could be capped at the 21,017 level, which is also the bottom of a gap that opened up between Aug. 4 and 5.

Short-selling accounted for 7.9 percent of total turnover on the Hong Kong bourse on Friday.


Source: Reuters

[winston]

Strong caution as A shares make weak start
Tuesday, January 31, 2012

Shanghai A shares resumed trading yesterday after the Lunar New Year holiday, closing down 1.4 percent.
This was a disappointment as many had expected a firmer opening day, mirroring trading in Hong Kong last week.

Sentiment toward A shares turned sour as mainland policymakers left the reserve requirement ratio unchanged, contrary to expectations.

The Hang Seng Index also closed lower yesterday, retreating 1.6 percent to end at 20,160.

A Greek debt-swap deal, if secured, could help lift the market briefly.

But the fundamentals have not changed: weak economic data and a slow recovery in the United States; worries that the worst is yet to come from the euro zone, and fears that China will not loosen credit this year continue to prevail. Do not go bargain-hunting.

If the Hang Seng Index were to pull back to 19,400, consider buying cement, building materials and casino shares for range-trading.

http://www.thestandard.com.hk/news_deta ... 20131&fc=2

[winston]

DJ MARKET TALK: H-Shares' Rally Has More Legs - Nomura

1514 [Dow Jones] Nomura says that in late 2011, Hong Kong-listed China stocks lagged for two years on a now well-aired combination of headwinds, including counter-cyclical credit tightening, concerns about the sustainability of investment-led growth, profitability setbacks from rising labor (and other) costs; and uncertainties over 2012's leadership transition.

It says the more structural-related of these problems aren't going away anytime soon, but the stocks' most immediate headwind--the year-long credit stranglehold that fuelled fears of a hard landing and mass business failures--is easing, and "further monetary relief lies ahead."

The house thinks "investors grew too downbeat on an economy still generating respectable medium-term demand growth," and they can capture a further substantial portion of the still-large discount on H-share stocks.

The H-share index is up 13.2% so far in 2012.

Source: Dow Jones Newswire

[winston]

Third of mainland companies forecast 2011 losses

About a third of mainland-listed companies have forecast an earnings drop or losses for 2011, the latest sign that the stock markets are still struggling with weak fundamentals.

Source: SCMP

[winston]

DJ MARKET TALK: UBS Picks Out "Relatively Safe" H-Share Laggards

1117 [Dow Jones] Although UBS advises waiting for a better entry point in February, it notes that some investors who are light on China may have to accumulate now;

Hence, the house screens for stocks that "look relatively safe while outperforming if the market continues to rally in February."

It examines tier-2 index stocks in each sector for potential laggards, at the same time focusing on high-beta stocks that have solid fundamentals;

Its 10-stock basket for China laggards include Dongfang Electric (1072.HK), Anta Sports (2020.HK), GOME (0493.HK), Hengdeli (3389.HK), Kingboard Chemical (0148.HK), GCL-Poly Energy (3800.HK), BBMG (2009.HK), Shougang Fushan Resources (0639.HK), Evergrande (3333.HK) and Air China (0753.HK).

Source: Dow Jones Newswire

[winston]

Short selling accounted for 7.9 percent of total turnover on Wednesday, which jumped to its highest since Jan. 19.

Shorting interest in some Chinese developers stayed elevated despite strong gains, suggesting some investors remained ambivalent.


Source: Reuters

[winston]

The HSI closed at 21,365 yesterday. It will soon hit 21,500 and knock out most of the bear warrants.

Again, investors who like speculation will suffer. Further market momentum may push the index near the 22,000 level. But after that, it is likely to slide.

The mainland and Hong Kong are likely to suffer with the rest of the world from the euro zone debt crisis. Right? If not, how far can this rebound go?


Source: Dr Check, The Standard HK

[winston]

DJ MARKET TALK: CS Picks China/HK Plays Close To Bottoming Out
Feb 17, 2012

1522 [Dow Jones] Credit Suisse identifies Chinese stocks where the indicator suggests that analyst sentiment is the most negative, with the level of negative sentiment usually defining a long-term bottom.

It looks at stocks where over 100% of the analysts have cut their numbers in six months and the sentiment is at a level from where we have seen recoveries in the past, and six stocks come out of the screening:

China Yurun (1068.HK), Nine Dragons Paper (2689.HK), Bao Steel (600019.SH), Lee and Man Paper (2314.HK), China Life (2628.HK) and Yanzhou Coal (1171.HK).

CS runs the same screen for HK stocks and also comes up with 6 stocks:

Swire Pacific (0019.HK), Hang Seng Bank (0011.HK), Hopewell Holdings (0054.HK), Hutchison Whampoa (0013.HK), Cathay Pacific (0293.HK) and Orient Overseas (0316.HK).


Source: Dow Jones Newswire

[winston]

DJ MARKET TALK: Easiest Money Likely Have Been Made In HK Market

1523 [Dow Jones] While it's difficult to conclude for the full year, at least for 1Q12, it could be argued that the easiest money has been made.

At Monday's intraday peak of 21,760.34, the HSI rallies 18.0% in 2012, almost recouping all of the index's 20.0% loss in 2011.

Risk-on mode (due to global central banks' credit loosening) and China easing had been the main theme driving Hong Kong's market's indiscriminate rally and stocks with inferior fundamentals actually have been gone up the most in part due to powerful mean reversion.

Still, at this point, the easiest money likely has been made, and stocks' performance going forward will rely much more on sector- and company-specific fundamentals, starting with the reporting season in earnest.


Source: Dow Jones Newswire

[winston]

DJ MARKET TALK: GS Still Pro-Cyclical But Beware Of Profit-Taking

1307 [Dow Jones] Goldman Sachs says it's still pro-cyclical among China equities, but "beware of profit-taking on earnings in risky areas."

It prefers banks, energy, auto as Overweight sectors, and defensives such as staples and telco as Underweight sectors.

"We think low multiples, explicit catalysts, and limited earnings risks will continue to work well as we head into two rounds of results."

It believes the RRR cut will benefit banks, by freeing up funds for investment, improve interbank liquidity, and reduce growth/asset quality risks, and adds that any profit-taking may focus on sectors like property, materials, industrials, which have been very strong, but may see sizeable earnings cuts (and in the case of property, policy disappointment), "we would not chase these."

Source: Dow Jones Newswire