15-08-2018

Turkey has encountered an economic crisis recently which led to a plunge in Lira. The US tariff sanction is only the trigger point for the crisis. The main reason is that Turkey's financial position is fragile, with high national debt and relatively low foreign exchange reserve. In recent years, the Turkish government stimulated economic growth by implementing easing monetary policy which caused serious inflation. When the sanction weakened market confidence, which caused a plunge in Lira, the debt crisis emerged. In addition, Turkey’s strong GDP growth in recent years is due to the fact that local governments, banks and enterprises have used large amounts of USD-denominated bonds to stimulate domestic consumption and thus stimulate economic growth. The market concerns the crisis will spread over to other emerging countries, and thus causing market capital to flood into USD denominated assets, which further strengthen the dollar and putting more pressure on emerging market. Insufficient foreign exchange reserves in Turkey causing investors to further withdraw capital from the country as they concern Turkey will have difficulty repaying foreign debts, creating a vicious cycle. Besides, Turkey has a very close and stable relationship with European and Asian companies, investors worried that the crisis could have a kind of contagion effect to the rest of the world and triggered the sell-off on European and Asian stock markets and currency markets. In particular, as the USD remains strong, USD/CNY has crossed the important level of 6.9 earlier today, which further weighed on the already poor performing China’s equity markets and HK equity market. The risk aversion fears continue to dominate HK stock market in the earnings season, as we saw so many companies had their prices crashed even with a beat-consensus financial results. With the US-China trade war concern continues and worsening Turkish crisis, investors are suggested to employ a defense strategy such as overweighting Utilities, local banks and local property management companies.

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Market Analysis


Widening net interest margins should boost local bank's revenue

The United States has entered a rising rates cycle, along with decent economic indicators providing room for further interest rate hike. The Fed also reiterated a gradual rate hikes during the latest Federal Open Market Committee meeting ...

08-08-2018

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Rerate local retail industry amid strong growth of local consumer market

The local consumer market has been growing strongly. The value of total retail sales in May rose 12.9% year-over-year, increased by 15 consecutive months. Both consumer discretionary and consumer staple industry had recorded double-digit growth ...

01-08-2018

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The release of easing monetary policy is expected to ease the financial constraints in China

The Chinese government has been shrinking the sprawling shadow-banking system and implementing de-leveraging since last year. Investors were becoming concerned that the tighter asset management rules released in April would lead to a shortage of capital in the market due to over-deleveraging ...

25-07-2018

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Capital inflow on quality stocks amid Yuan depreciation and escalating trade war concern

Amid the escalating trade war, tariffs between China and the United States have led to uncertainties in China’s export market and overall economic growth. Both domestic and external demand have been decreasing and therefore slow down China's economic growth ...

18-07-2018

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Macau’s GGR is expected to pick up after the end of the World Cup

Considering May and June have always been the off season for Macau’s gaming sector historically together with the negative headwind from the World Cup in Russia, Macau’s gross gambling revenue (GGR) rose by 12.5% year-on-year in June to MOP22.5 billion which is below consensus ...

11-07-2018

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Revenue of property investment player boosted by strong retail sales, Defensive play amid global trade tensions

Hong Kong's retail sales are thriving while financial markets are being buffeted by global trade tensions and rising borrowing costs. The value of total retail sales in May rose 12.9% over the same month in 2017, which is also its 15th month of expansion ...

04-07-2018

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Markets volatile amid trade war fears, further reduce exposure if market rebound

Along with the intensifying and spreading trade confrontation between China and the United States, trade war fears continue to roil global stock markets. The People’s Bank of China also cut some banks’ reserve requirements to boost lending. However, among the released liquidity of 700 billion yuan ...

27-06-2018

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Reduce market exposure amid intensifying US-China trade war

The U.S announcement of a 25 percent tariff on up to $50 billion of Chinese products intensified the US-China trade war. It prompts China’s Commerce Ministry to respond with a 25 percent tariff on $50 billion of U.S. goods ...

20-06-2018

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The new upward cycle for construction machinery amid solid demand growth

In 2018, with the continuous momentum from increasing export demand and ongoing innovation of products, construction machines’ sales keep going strong. The main products had a double-digit growth in the first five months of 2018 which exceeds expectation. Construction machines have an average life expectancy of around 10 years ...

13-06-2018

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Strong demand of beer expected with World Cup approaching

All the World Cup related sectors are gaining significant momentum with the Russia World Cup approaching. Amid all the World Cup related sectors, beer industry appears to be a more mature and seasonal industry. Studying the past 20 years statistics ...

06-06-2018

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Potential re-rating expected amid continuing gas industry reform

China’s government continue to implement coal to gas switching policy, which leads to an increase in the demand of natural gas. In order to prevent gas shortage from happening again, The NDRC recently released some policies to boost the development of the natural gas industry ...

30-05-2018

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Lower than expected import tariffs cut on vehicle provide chances for revaluation of domestically produced luxury car manufacturers

China’s Finance Ministry said that it will cut import tariffs on vehicles to 15 percent, down from 25 percent, starting 1 July 2018. The magnitude of vehicle import tariff cut is lower than previous market expectation at 5-10%, thus less impact on the domestically produced luxury car manufacturers ...

23-05-2018

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Higher paper prices amid sharp drop in imported waste paper volume, accumulate industry leaders and get ready for the peak season

The Chinese government has imposed much stricter quality restrictions on imported cardboard, started at beginning of March this year. Under this new restriction, import cardboard will only be accepted with contamination rates below 0.5%, rather than the 1.5% previously applied ...

16-05-2018

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Bullish on sporting goods industry amid consumption upgrade and supportive policies

One of the key messages released from China’s 19th National Congress about the target of future China’s economic growth is the structural reform from quantity growth-focused to quality growth-focused. With rising per-capita income, the consumption style of Chinese consumer has changed and they are spending more to improve their living quality ...

09-05-2018

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Higher dividend payout ratio amid slowing down 5G development, a chance of industry revaluation

We see the impact of the implementation of further tariff reduction and completely remove roaming charges directed by the Chinese government are marginal to the telecom sector. While investors keep tracking the impact of the new measures ...

02-05-2018

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Bullish on oil sector amid solid global demand in crude oil

A global recovery story drives stronger demand for crude oil worldwide. According to OPEC, world oil demand grew by 1.73% to 97.07 million barrels per day in 2017, with China and emerging European countries recorded 3-4% solid demand growth last year. We expect oil demand remains solid in 2018 ...

25-04-2018

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Further reduce equity position amid heightening market risks

Equity markets remain volatile amid heightening political risks. Investors are getting more nervous to every headline, including President Donald Trump threated to impose $100 billion of additional tariffs against China ...

18-04-2018

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China auto dealers backed by attractive valuation with solid fundamentals and supportive policies

Chinese President announced plans on lowering tariffs for autos at the Boas Forum for Asia. The plan should be positive to China’s auto dealers, who are still enjoying the earnings upcycle, by spurring demands for import autos as we expect retail prices of import autos would decline by the approximately same amount to reflect the decrease in tariffs ...

11-04-2018

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Great opportunities in environmental protection sector amid supportive long-term environmental protection policy

According to the Chinese Government’s 13th five-year plan, the market value of wastewater treatment in China may reach thousand billion RMB over the next five years. While there is still a huge demand in the development of wastewater treatment in China ...

04-04-2018

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Trim positions in blue chips for better risk management amid unstable global market conditions

US stocks tumble after Trump proposed tariffs on $50 billion worth of Chinese exports to the United States. While fear of a trade war weighed on sentiment, there are several bad news from US technology further weighed down market, including the Facebook and Cambridge Analytica data scandal ...

28-03-2018

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Chinese leading telecommunication equipment manufacturer to benefit from accelerating pace of 5G development

Coverage of fourth-generation wireless (4G) networking services continues to expand across China. The annual Government Work Report delivered by China’s State Council earlier this month stated that the government will push the development of the fifth generation wireless (5G) ...

21-03-2018

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Deepening of supply-side reform continues, more upside for cement producer stocks are expected

The demands of cement across China remain intact in 2017. A further decline in new cement capacity should support the cement prices to continue uptrend this year. The Chinese government has implemented a new environmental tax policy since the beginning of this year ...

14-03-2018

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Solid recovery in HK retail market amid RMB appreciation, rental revenue and percentage rent provisions likely to continue uptrend

HK retail industry recovery remains solid. The value of total retail sales in January 2018 increased by 4.1% yoy, recorded the 11th consecutive months of year-over-year growth, which signal a sign of recovery in consumer spending of inbound tourism. Besides ...

07-03-2018

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Revenue and dividend payout of Power Assets Holdings is expected to increase due to UK economic recovery

The Bank of England left its policy unchanged by keeping interest rates at 0.5% and maintain its quantitative easing stimulus at the BoE February meeting. At the same time, the central bank lifted its 2018 UK GDP growth forecast to 1.8% from 1.6% foreseen at the November inflation report ...

28-02-2018

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AAC Technologies: Long-term growth story remains intact, buy the dip

The share price of AAC has recorded a significant correction recently, as several analysts have lowered their estimates for iPhone X shipments in the past few weeks which had weighed on sentiments. However...

21-02-2018

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Accumulate after the Chinese New Year for mid-long term investment

The Fed will continue its hiking cycle this year and gradually reduce its balance sheet amid strong U.S. economic backdrop. The recent correction in U.S. equity market has triggered sell-offs in the global equity markets ...

14-02-2018

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Investor risk appetite wanes, prefer H-shares and large-cap private companies with great growth potential in long-run

The Chinese economy has been growing well over the past year. We see improving earnings in the region, especially those large-cap private companies have recorded rapid growth in terms of corporate earnings ...

07-02-2018

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Banks impose stricter measures on granting credit to property developers, integration progress in mainland property sector is set to accelerate

We see signs of the Chinese government to speed up its deleveraging progress. Recently, some commercial banks in China have stopped granting credit to the real estate developers and ...

31-01-2018

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Gas companies with LNG storage facilities are set to benefit from natural gas supply shortage in China

In 2017, the Chinese Government has made a strong push for its "coal to gas" conversion policy in Beijing, Tianjin and Heibei with an aim to improve the smog pollution problem ...

24-01-2018

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China Banking Sector: Recovery pace is well on track

With improving net interest margin and stable loan growth, we believe the recovery of China banks sector continues to be well on track. Moreover, with improving earnings outlook of the Mainland enterprises ...

17-01-2018

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The key beneficiary of sustained strong HK stock market

We believe the Hong Kong Exchanges and Clearing Ltd. is well geared to benefit from the sustained strong Hong Kong stock market. Its latest acceptance of allowing the weighted voting rights structure for companies listed in HK is imminently a big plus ...

10-01-2018

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Surging yield of debt market contributed by the Central Government’s risk prevention measures is expected to stimulate investment income of China insurance players

The previous Central Economic Conference placed “Prevention and Mitigation of Major Risks” as one of the three major topics of the conference as well as the government policy focus of the next three years ...

03-01-2018

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China’s railway sector recovery in the pipeline, as government tenders accelerating

China has been stepping up the tenders for railway trains after the 19th Communist Party of China National Congress. The government made a tender of 75 and 100 sets of multiple units respectively on November 4 and 10, raising the number of tenders to 314 this year ...

27-12-2017

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Better-than-expected oil cut deal will continue to support oil price

OPEC agreed earlier to extend the oil cut deal to end of 2018, and would consider in June next year whether a further adjustment is needed. On the other hand, exempted countries including Libya and Nigeria have informed OPEC that the two countries targeted not to increase oil production next year. From the demand side ...

20-12-2017

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Mengniu: a solid dairy leader in the defensive staple sector

We continue to favour Mengniu (2319HK) in view of accelerating dairy demand growth in China, as well as being well-geared in the relatively defensive staple sector. Further, with its stringent sales and product upgrade strategy underpinned by proven execution, we believe Mengniu's brand competitiveness is set to enhance ...

13-12-2017

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Defensive play during Hong Kong stock tumble under profit-taking

The Hong Kong stock market made a strong gain thus far this year. This prompts rising investors to gradually start to lock in profits before the end of the year. This coupled with the Christmas holidays approaching, the market seems lacking of investment direction ...

06-12-2017

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Invest pharmaceutical companies with strong R&D capabilities on dip for long-term investment

As the population in China ages, demand for medicine is on the rise. In order to cope with rising medical costs, China has been actively reforming the entire medical system in recent years. Key reforms, including the “Two Invoices System” and the elimination of 15% drug mark-up policy in hospitals ...

29-11-2017

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Mobile specifications upgrade from Android players amid strong sales of Apple’s iPhone X

Apple’s iPhone X has recorded a strong sales number worldwide. Supply is abundant and there is no serious shortage issue as the market expected, breaking the rumors of low production yield rate and delay of key components earlier ...

22-11-2017

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China insurance sector: Relaxing foreign ownership; market development will further accelerate

China announced it will relax the foreign investment policy in the insurance industry by phase, allowing the foreign ownership in joint ventures to increase up to 51% in three years’ time and to fully relax to “wholly-owned” in five years’ time ...

15-11-2017

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Macau gaming sector: Better outlook ahead

Macau’s casino revenue in October climbed to the highest in three years as many high-stake bettors and recreational players visited Macau after the Golden Week holiday. Gross gaming receipts rose 22.1 percent to $3.3 billion US dollars last month, according to the latest data released by Macau’s Gaming Inspection and Coordination Bureau ...

08-11-2017

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Implementation of environmental measures benefit cement industry

Clinker and sand prices have more than doubled as a result of environmental measures, providing a profitable business extension for cement players. Large players with higher environmental standards are in a position to gain more market shares ...

01-11-2017

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Rising bond yield and sector structural improvement benefit insurance sector

China 10-year bond yield began to rebound since September last year, and has risen to 3.81% recently, reaching three-year high. The rise in Treasury Yield is favorable to life insurance companies in different aspects. Frist of all, as life insurance companies generally allocate more than 80% of their investment in fixed-income ...

25-10-2017

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Rising oil prices and restructuring concept benefit oil stocks

Oil stocks are the main beneficiaries of rising price of crude oil. Among different industry players, CNOOC Limited will benefit most as its profitability is most sensitive to changes in oil prices. The price of crude oil is increasing gradually, with the support of oil cut deal of OPEC ...

18-10-2017

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Breakthrough in land conversion in Qianhai releases value of companies’ land reserves

On December 7, 2012, Xi Jinping visited Qianhai on his first stop of site visit following the end of the Eighteenth National Congress, emphasizing the development of Qianhai was an new opportunity of the Shenzhen Special Economic Zone and the opening up of a new platform for the cooperation between Guangdong, Hong Kong and Shenzhen ...

11-10-2017

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Market leaders well geared to benefit from accelerating recovery in China’s dairy sector

Pace of recovery in the China dairy sector has been stepping up. While the market competition remains fierce, the market leaders have seen a rising market share gain; and the industry sales growth has been improving well (to 6-7% in the second quarter of 2017) ...

04-10-2017

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China’s electric car sector poised for further re-rating, as government plans to phase out traditional diesel/petrol vehicles

Following the announcement by the UK and France to ban production of diesel and petrol engine vehicles by 2040, the Chinese Ministry of Industry and Commerce also said that China is currently proactively to schedule a timetable to phase out the traditional diesel and petrol vehicle production ...

27-09-2017

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The effective of new Education Act is expected to increase profitability of high-quality private schools

The seriously inadequate investment in public education, coupled with the rapid rise in the number of middle class families, stimulate the demand of high-quality private schools ...

20-09-2017

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Hong Kong property stocks benefit from potential “speed-up” of agricultural land development

Regarding the proposed local first-time homebuyers scheme by the Hong Kong Government, some industry participants suggest that developers can make good use of the agricultural lands they own through a land premium concession ...

13-09-2017

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Is the hike of policy rate by the PBOC a tightening signal?

The People’ Bank of China (“PBOC”) raised interest rate of various lending facilities in open market recently, not only raising interest rate on Medium-Term Lending Facility (“MLF”) by 10 basis points historically before Chinese New Year ...

13-02-2017

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Investment Strategy under Trump’s Executive Order

Donald Trump continues to be the spotlight of the world after he was sworn in as President of the United State on Jan 20. Within two weeks after taking the office, Trump has already signed several executive orders ...

06-02-2017

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Rental growth for non-core commercial districts in HK

Central is a prime location for commercial space. It has always been the focal point for multinational financial groups and local traditional enterprises. In recent years, however, these large enterprises have gradually narrowed the office space in Central ...

01-02-2017

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How do Trump’s policies influence economy and stock market?

2017 has just started, with the market continuing to focus on Donald Trump’s presidency on 20 January. Investors are trying to look for clues from Trump’s manifesto and post-election public speeches to develop their future investment strategies ...

09-01-2017

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Where is Hong Kong’s Property Market Heading?

Since May 2016, Hong Kong’s home prices have been rising rapidly. In November 2016, the government raised the stamp duty on residential purchases again to 15%, except for first time buyers, in an attempt to curb investment demands and tame the overheating property market ...

03-01-2017

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The Opportunities brought by PPP

The central Chinese government continues to tighten control on the real estate market, which has weakened the contribution made by property investments to the economy. To mitigate this, China is encouraging the development of infrastructure instead of property as the source of economic growth, and promoting the Public-Private-Partnership (PPP) model ...

12-12-2016

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Strategies for Shenzhen-Hong Kong Stock Connect

The long-awaited Shenzhen-Hong Kong Stock Connect has finally debuted, but the excitement and passion of the market that was last year, when Shanghai-Hong Kong was launched, has long gone ...

28-11-2016

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Rebalancing for the Trump Era

Trump’s victory of the US president election has shocked the financial market. As the surprise subsides, investors are now looking for clues of investment opportunities in his policy proposals ...

14-11-2016

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