HSI Weekly Movement

Weekly Market Statistics

Review & Outlook of Market Performance

The local bourse was very quiet at the beginning of this week as investors stayed sidelined awaiting the release of the second-quarter GDP data in the US on Friday. Market turnover on Monday was extremely light at HK$4.37 billion - the lowest since 2^nd January 2001. After typhoon Yutu kept the exchange closed on Wednesday, the local markets resumed trading on the next day with Hang Seng Index closing at its lowest level since April 1999. Global banking titan HSBC tumbled to its 52-week low of HK$86.50 on Thursday on fears about its exposure to Latin America after financially fragile Argentina postponed a key austerity bill. Ports-to-telecoms conglomerate Hutchison Whampoa also slipped to HK$72.75 - its lowest since November 1999 - on the same day on nagging concern over Hutchison’s required provisions for the declining value of its Vodafone shares. PCCW also slid to end the week at its post-merger low of HK$1.98. PCCW shares had been battered since it scrapped its first-ever bond issue amid poor market response. The benchmark Hang Seng Index had a technical rebound on Friday ahead of the expiry of the July futures contracts next Monday and finished the week at 12,182.17, down 119.51 points or 1.0% w-o-w. Average daily turnover was just HK$6.04 billion. Meanwhile, after weeks of lacklustre performance, China-related stocks saw signs of stabilizing. Chinese offshore oil company CNOOC (HK$7.90, up 7.48% w-o-w) outshone the market on news that it would replace Dao Heng Bank as an HSI constituent stock effective 31^st July. The Hang Seng China Enterprises Index ended the week up 3.7% w-o-w and Hang Seng China-affiliated Corp Index gained 2.5% w-o-w. 

The disappointing Q2 GDP data in the US released on Friday may not surprise the market as most people have already expected the dismal news. However, investors remained wary of continuing weakness in the world economy. In fact, the local market has been seriously undermined by meagre sentiment that makes the HSI the worst performing share index in Asia so far in 2001. We envisage the HSI would test its next support level of 11,800 and should receive strong resistance to break through 12,400.. 

 Stock

 Stock Code

Closing price @27/07/01

(HK$)

 W-O-W Changes

 Remarks / Comments

Absolute

%

PCCW

0008

HK$1.980

-HK$0.145

-6.82%

The stock once reached its post-merger low of HK$1.98 on concern about its financial condition after the company scrapped its proposed US$2.5-billion bond offering due to weak market response.

Hutchison Whampoa

0013

HK$73.50

-HK$3.25

-4.23%

Worries over the company to make provisions for the fall in value of its stake in Vodafone and its investment in 3G mobile phone businesses battered the stock.

China Unicom

0762

HK$13.30

+HK$0.75

+5.98%

The stock outperformed its rival China Mobile after recent data showed Unicom is enjoying a much faster subscriber growth.

 Stock

 Stock Code

Closing price @27/07/01

(HK$)

W-O-W Changes

Remarks / Comments

Absolute

%

China Resources

0291

HK$11.90

+HK$0.65

+5.78%

Investors’ interests returned after recent significant stock price correction.

 Stock

 Stock Code

Closing price @27/07/01

(HK$)

 W-O-W Changes

 Remarks / Comments

Absolute

%

PetroChina

0857

HK$1.63

+HK$0.12

+7.95%

The mainland oil giant’s share price soared after OPEC confirmed a production cut of one million barrels per day.

 (0045)

Turnover

(HK$m)

Operating profit 

(HK$m)

Share of results of associates

 (HK$m)

Net profit

 (HK$m)

EPS 

(HK cents)

DPS 

(HK cents)

Interim results for the six months ended 30^th June, 2001

1,291

(-17%)

349

(-5%)

1

(-67%)

140

 (+11%)

12

(+11%)

Nil

(N/A)

• Hongkong & Shanghai Hotels reported an 11% y-o-y rise in net profit to HK$140 million for the six months ended 30^th June 2001. Earnings per share were HK$0.12 compared with HK$0.11 a year before but no interim dividend was being proposed. Turnover for the period slipped 17% y-o-y to HK$1,291 million while operating profit was slightly down 5% to HK$349 million.

• The group’s Hong Kong business generated revenues of HK$774 million (60% of the total revenue compared with 47% last year) while other Asian countries contributed HK$243 million (19% of the total revenue compared with 31% last year). Another HK$274 million (21% of the total revenue for both this year and the last) was derived from the US.

• The group said that the drop in turnover was attributable to the slowing US economy. It also said it would remain cautious in controlling costs and might even continue disposing of some non-core businesses, including an office building in Bangkok, a beachfront site in Phuket as well as offices and apartments in Ho Chi Minh City. 

• Occupancy at the flagship Peninsula Hong Kong was up 2 percentage points to 55% in the period, with an average room rate of US$377 (from US$370 a year ago). Kowloon Hotel’s occupancy edged up to 91% (89% in 2000), with its average room rate rising to US$71 from last year’s US$64.

• However, occupancy of The Peninsula New York slumped 10 percentage points to 66% in the first half, with its average room rate edging up to US$508 per night (US$499 in 2000). Most other hotels of the group have seen their occupancies down slightly with steady room rate growths only. One exception was The Peninsula Bangkok which had its occupancy down slightly but managed to achieve a considerable growth in its room rates. The hotel’s average room rate shot up to US$114 from the previous year’s US$79.

• The group’s operational profit dipped 5% due in part to the disposal of a luxury serviced apartment complex in New York last year, which no longer contributed to the group’s earnings this year. However, the group did manage to lower its financing charges (21% down to HK$177 million) due to lower interest rates. 

• The group opened a Peninsula-brand hotel in Chicago last month and has signed a memorandum of understanding with Japan’s Mitsubishi Estate to jointly develop another hotel in Tokyo. Construction of The Peninsula Tokyo will commence in the next three to four years, with completion not seen before the start of 2007. Meanwhile, the group also plans to spend US$27 million on the refurbishment of its 20%-owned Palace Hotel in Beijing and costs will be shared between the group and its partner China Everbright. 

• The group’s gearing stood at 31% at the end of June and remains well within the debt capacity of the group. Net borrowings stood at HK$5.8 billion. It currently has no plan to seek funding from the capital markets.

Indicator

Change/Index

Comments

Existing home sales

- June

-0.6% m-o-m

US existing home sales dipped 0.6% m-o-m to a seasonally adjusted annual rate of about 5.33 million in June from a revised rate of 5.36 million units in May. The rate was up 2.9% y-o-y and exceeded market expectations of a 5.30-million unit-sales pace.

Durable goods order

- June

-2.0% m-o-m

US orders for durable goods fell 2.0% after rising a revised 2.7% in May. Excluding volatile transportation-sector orders, durables orders fell 1.5% in June. Orders for cars and car parts plunged 5.0% in June after posting a 6.8% increase in May. Computers and electronic product orders fell 3.2% last month following a 0.6% gain in May.

Gross domestic product

- 2^nd quarter

+0.7% y-o-y

The 0.7% growth rate was the lowest since a 0.1% contraction in the first quarter of 1993. It was below the revised 1.3% growth rate in the first quarter.

New home sales

- June

+1.7% m-o-m

New home sales rose 1.7% in June to a seasonally adjusted 922,000 annual pace, compared with a downwardly revised 0.2% gain to 907,000 in May.

30^th July, 2001 (Monday)

US

:-

Personal income - June

Personal consumption - June

Consumer confidence - July

31^st July, 2001 (Tuesday)

HK

US

:-

:-

Monetary statistics - June

The Bank of East Asia, Ltd. (0023) - Interim results

Ingram Micro Inc. - Q2 results

Manulife Financial Corp - Q2 results

Barnsandnoble.com inc. - Q2 results

Priceline.com Inc. - Q2 results

1^st August, 2001 (Wednesday)

HK

US

:-

:-

International Bank of Asia Ltd. (0636) - Interim results

Kerry Properties Ltd. (0683) – Interim results

MTR Corporation Ltd. (0066) – Interim results

Construction spending – June

NAPM index – July

Onyx Pharmaceuticals Inc. - Q2 results

Proctor & Gamble Co. - Q4 results

2^nd August, 2001 (Thursday)

US

:-

Factory orders – June

Meredith Corp. – Q4 results

Sara Lee Corp. - Q4 results

3^rd August, 2001 (Friday)

HK

US

:-

:-

CITIC Ka Wah Bank Ltd. (0183) - Interim results

Jiangsu Nandasoft Co. Ltd. (8045) - Interim results

Nonfarm payroll – July

Unemployment rate – July

NAPM non-manufacturing index – July

Disney (Walt) Co. - Q3 results

Viacom Inc. - Q2 results

Disclaimant  

This report has been prepared solely for information purposes and we are not soliciting any action based upon it. Neither this document nor its contents shall be constructed as an offer, invitation, advertisement, inducement or representation of any kind or form whatsoever. The information is based upon information which we consider reliable, but accuracy or completeness is not guaranteed. Opinions expressed herein are subject to change without notice. East Asia Securities Company Limited and other associated with it may have positions in the securities of the company or companies mentioned herein.