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

[winston]

So why did HK drop 610 points on Friday ?

The "experts" are saying that the institutions are selling HK Equities and redeploying those money into Japanese Equities.

Sounds a bit funny to me but who am I to argue with such "experts".

The question for me is :-
1. What can I buy on this dip ?
2. How will US Earnings season end ?

[winston]

Market Strategy
2013-06-07


Accumulate stocks once Hang Seng Index dips below 22,000

Hang Seng Index has declined approximately 1,670 points or 7.1% from intra-day high of 23,512 on May 20 which should have discounted the slowdown in China’s economy from valuation point of view.

The benchmark index, down 3.6% year-to-date, is currently priced at historical PER of 10.6x compared with 5-year and 10-year average of 13.0x and 15.0x respectively.

HSCEI, down 9.4% year-to-date, is presently priced at historical PER of 8.6x and just 9% above a 10-year low of 7.9x hit in August 2012.

Manufacturing PMI increased from 50.6 in April to 50.8 in May showing that China’s manufacturing activities are still in an expansionary phase. China’s vehicle sales volume and property sales value grew 13% and 60% year-on-year respectively in the first four months of the year.

We see limited downside risk for Hang Seng Index and suggest investors to accumulate stocks once the index dips below 22,000. Our year-end target for the index remains unchanged at 24,500 based on valuation at historical PER of 11.8x.


Maintain overweight on Chinese banks and property Developers

We reiterate our overweight position on Chinese banks and property developers given their low valuation and high earnings visibility. Eight largest Chinese property developers are currently trading at an average 2013 PER of 8.1x with EPS growth of 18%, 2012 P/B of 1.52x and 36% discount to NAV.

Contracted property sales are expected to grow an average 15% in 2013 compared with an average growth of 62% yoy in the first four months of the year.

Our top picks are Longfor Properties (960), Country Garden (2007) and Shimao Property (813).

We also like Chinese banks because of its extremely cheap valuation. Eight largest Chinese banks are currently trading at an average 2013 PER of 5.4x with core EPS growth of 5%, 2012 P/B of 1.07x and dividend yield of 5.3%. Our top picks are ICBC (1398) and CCB (939).


Source: GuocoCapital Limited

[winston]

From the charts, the next support for the HSI is seen around 16,500.

Source: Dr Check, The Standard HK

[winston]

Technically, the HSI is now below its 10- and 20-day moving average.

It has tried and failed to clear very big resistance at around 23500 to 24000 four times this year.

A fall below the 50-day moving average - about 22,700 - could bring deeper consolidation.

Source: Dr Check, The Standard HK

[winston]

If the Hang Seng Index falls below 22,700 - its 50-day moving average - a deeper correction is inevitable.

Source: Dr Check, The Standard HK

[winston]

This week we will see more figures from the United States that were delayed by the government shutdown.

Any worse-than-expected figures may easily trigger a deeper correction in Hong Kong.

We must see whether the HSI can stay above its 50-day moving average or the 22,700 level.

If not, we need to wait a while before buying in.


Source: Dr Check, The Standard HK

[winston]

Templeton expects HSI to rise up to 20% in 2014, led by Macau gaming stocks

Mark Mobiusu, an emerging markets fund manager at Franklin Templeton Investments, said in a press conference that he expected the Hang Seng Index will rise 10-20% in 2014.

Mobiusu noted that though the Macau gaming stocks have risen substantially last year, they are expected to remain bullish in 2014, as the gaming licenses are very limited, and other entertainment business in Macau is developing.

He is also bullish toward the retailer and medicine stocks. In contrast, the Mainland banks are worrying due to the leverage and debt-related issues.

Source: AAStocks Financial News

[winston]

Watch the Hang Seng Index fall below 22,000 to test support at 21,500 and get on with enjoying the festivities.

Source: Dr Check, The Standard HK

[behappyalways]

Hang Seng Index, tiny top.
https://www.facebook.com/bartonsglobal

[winston]

I would set 20,500 to 21,000 as a bargain-hunting level. Above this, hold your fire.

Source: Dr Check, The Standard HK