HK & China - Market Direction 01 (May08 - Oct08)

[winston]

From UOB-Kay Hian:-

Fund managers’ concerns. We wrapped up almost a week of marketing for our 2H08 China Strategy - China Sings the Blues - in Singapore, Malaysia and Hong Kong early this week.

Two intertwining features stood out:

a) Funds which can hold cash are holding an inordinately huge amount of cash - 30-40% with one holding as much as 100%; and

b) Instead of focusing solely on specific stocks, fund managers were significantly more interested in the state of the China economy, policy risks, as well as its prospects. The interest in the macro picture has been the strongest since we started marketing with greater frequency in
2003.

From our meetings with 60 fund managers from about 45 funds and private banks, it was clear that they would like to buy but before doing so, they are waiting for clearer signals from China that it will not suffer a hard landing.

Equally interesting was the concern some had on the Chinese leaders’ ability to engineer a soft landing. Indeed, never had the Chinese leaders been tested as they are now by the most challenging domestic and international economic threats facing the country since the 1989 Tiananmen Square crackdown.

Indeed, we got the view that even as markets do rally, long-invested funds are prepared to sacrifice the first 10% of the run - just to be sure that they are not trapped by false starts.

Long-short funds which generally have fared better ytd, however, have also complained about too much volatility (sudden intra-day market reversals) and are only too glad if they can manage any mid single- digit returns on their trades.

[winston]

Hong Kong's Hang Seng index yr-end target cut to 26,100 - Credit Suisse

HONG KONG (XFN-ASIA) - Credit Suisse said it has cut its year-end target for Hong Kong's main Hang Seng index to 26,100 from 28,000, and the target for the Hang Seng China Enterprises index to 14,600 from 15,300.

Investors perceive higher risk premium given the global financial situation in the past two months, it said.

But it noted that the Hong Kong market is not trading at expensive levels, compared to its historical valuations and relative to the region.
[b]
It has an "overweight" stance on the local bourse.[/b]

"Should investors continue to worry about a worsening macro outlook, potential upside to the HSI and HSCEI would be reduced by 10 pct to year-end target of 23,300 and 12,900 respectively," it said.

Credit Suisse recommended "overweight" on stocks geared towards Hong Kong's domestic economy and the property market, and "neutral" on local financial stocks for the next 6-9 months.

It is "underweight" on China stocks due to mainland market fluctuations and regulatory uncertainty.

[winston]

HSI may seesaw after last week's rebound
Lisa Yu
Monday, July 28, 2008

As oil prices fall and investors adopt a wait-and-see position, Hong Kong stocks are expected to fluctuate this week, according to market watchers.

"At the beginning of the week, the local bourse may be a bit quiet but it is likely to advance towards the end of the week," said Sun Hung Kai Financial strategist Castor Pang. He predicts the benchmark Hang Seng Index will hover in a trading range between 22,300 and 23,700 points.

Prudential Brokerage associate director Kingston Lin expects the market to seesaw but move steadily in an "upward" direction.

"External factors are going to be positive. Oil prices will fall further. Both the mainland and US stock markets are likely to advance and the local bourse may surge further after testing 23,000 points," Lin said.

KGI Asia chief operating officer Ben Kwong Man-bun said: "Before the futures clearing, it's possible the market will test 23,500 points." The US dollar, as it stands, places pressure on the commodity market and directs money to flow into stocks, he added.

However, Delta Asia Financial head of equity markets Conita Hung said: "As the problems concerning some US financial institutions are still unclear, and while last week's rebound was great, the market needs time to digest and observe." Hung said the market will see some correction this week, which is normal after a dramatic rebound.

[HengHeng]

Am probably looking toward a small correction downwards. . other asian markets seems weak.

[winston]

Look sees 12-13pc earnings growth
KatherineNg
Tuesday, July 29, 2008

Hong Kong blue chips could be looking at earnings growth averaging 12-13 percent in the first half and are likely to sustain the momentum through the second half, according to UBS analyst Andrew Look.

"The impact of subprime woes and the mainland's economic slowdown have already been factored in. Hong Kong corporate earnings are still respectable with only manufacturing stocks negatively affected," Look told The Standard, ahead of the reporting season.

Look, who has more than once successfully predicted the movement of the benchmark index, said he believed the Hang Seng Index would fluctuate between 20,000 and 26,000.

Look said the low cost of capital for Hong Kong firms could partially offset the effects of the US economic slowdown. He believes a full recovery of the US economy would take at least two to three years.

Look also believes any further deterioration in US subprime and the economic slowdown will only hurt local market sentiment but not earnings growth. "Hong Kong companies will continue to grow over the year, although at a slower pace," he said, predicting Hang Seng Index stocks could achieve at least a 10 percent rise in earnings, led by the property and banking sectors.

[winston]

Wednesday July 30, 2:37 PM
China wants stable stock market ahead of Games: state media

China's securities regulator has made it a top priority to maintain the stability of the stock market ahead of the Beijing Olympics in August, state media reported Wednesday.

The Caijing magazine, which reported the news on its website, cited China Securities Regulatory Commission Chairman Shang Fulin.

Shang, who spoke at a work meeting, did not elaborate on how the securities regulator will support the stock market, which has slumped more than 50 percent from a historical high in October 2007.

"The regulators do not want to see sharp falls ahead of the Olympics," Caijing reported, citing an unnamed source close to the commission.

The latest comments come on top of other official efforts seeking to shore up weak share prices before the Olympics, including editorials in major state media in support of the markets.

The government has also ordered fund managers to refrain from public statements on the markets or individual stocks.

[kennynah]

like dat means further downside is limited....state controlled measures....pump the market up...everyone happy....

[-dol-]

Shanghai Composite is down today. HK also quite muted given that US gave a resounding thumbs up last night.

[HengHeng]

would mean buy first sell later. LOL

My target buy until olympics then start selling.

[kennynah]

like dat ah.....got 9 days(including weekends) to play this theme...

if u believe US index will punch up tonight...then, today lelong lelong asian stocks man...

(key word here is....IF)