Adder Financial: Expect a slight volatility preference of the Hang Seng Index within the day Pay close attention to the performance of technology stocks

Overview of the market

Yesterday, the three major indexes of the Hong Kong stock market fell collectively, but the decline was significantly reduced. As of the close, the Hang Seng Index fell 0.33% to close at 18952.31 points, losing 19000 points; the State-owned Enterprises Index fell 0.28%; The Hang Seng Technology Index fell 0.35%.

The sector was mixed, with oil and gas extraction, telecommunications, shipping and ports, and infrastructure leading gains, while consumer stocks, insurance, pharmaceuticals and real estate fell first. The market traded HK$111.716 billion, the technology index constituent stocks traded HK$23.363 billion, and southbound funds bought a net HK$16.478 billion.

Overnight, the three major indexes of the U.S. stock market rose slightly. The Dow rose 0.31%, the S&P 500 rose 0.24%, and the Nasdaq added 0.03%. The sector was mixed, with banks, telecommunications, utilities and others leading the gains.

In the European market, the four major stock indexes were mixed, with the UK's FTSE 100 up 1.80%, France's CAC 40 up 0.11%, Germany's DAX down 0.10%, and the Euro Stoxx 50 down 0.17%.

The UK CPI rose 7.9% y/y in June, beating expectations of 8.2% and well below the previous reading of 8.7% in May. The latest cooling inflation in the UK, the largest inflation problem among large economies, combined with last week's US inflation data, suggests that the monetary tightening actions taken by central banks to combat inflation since last year have worked.

The CPC Central Committee and the State Council: Increase support for private economic policies, focus on promoting the high-quality development of the private economy, encourage private enterprises to expand overseas business, participate in overseas projects in an orderly manner, and support platform enterprises to show their skills in job creation, consumption expansion and international competition.

It is expected that the HSI will fluctuate slightly during the day. In the Asia-Pacific market, the Nikkei 225 fell 0.26% and the South Korean Composite opened down 0.50%. As of July 20, the Hang Seng Index closed at 18,970 points in July (July), up 62 points or 0.328%, and 18 points high.

In terms of sectors, the Nasdaq China Golden Dragon Index rose 0.69% overnight, outperforming the three major indexes of US stocks, and popular Chinese concept stocks were mixed. Yesterday, the Hang Seng TECH Index fell 0.35%, and it is expected that today's technology index will pick up and the constituent stocks will tend to diverge. Year-to-date, the Hang Seng Technology Index is down 0.33%, up 10.02% in January, 13.59% in February, 9.65% in March, 9.35% in April, 7.04% in May, 7.85% in June and 5.21% in July 12 trading days.

Technology companies have entered the performance period, Tesla and Netflix announced their 2023Q2 results after hours yesterday, and more large technology stocks will announce results next week, after which Chinese Internet technology stocks will also announce results. Therefore, under the relatively clear monetary policy of the Fed at this stage, performance will be the key to the recent trend of Hong Kong and US technology stocks.

Continue to focus on energy and oil and gas extraction stocks. Year-to-date, the three major oil and gas companies have risen sharply, and PetroChina (00857. HK) rose 76.42% and CNOOC (00883. HK) rose 32.83% and Sinopec (00386. HK) rose 28.89%. Saudi Arabia extended voluntary production cuts until the end of 2024.

New energy vehicles can still be actively concerned in the short term. On July 19, the Ministry of Commerce said that since the beginning of this year, it has taken multiple measures to stabilize foreign trade and promote consumption by stabilizing foreign investment, giving full play to the comprehensive effect of policies. We will continue to promote the further implementation of the policies that have been introduced, and accelerate the introduction of policies and measures that have not yet been introduced when conditions are met. In terms of foreign trade, it will study and support new energy vehicles to explore the international market.

Focus on

1) China Ship Leasing (03877.HK): The Company announced that it expects the unaudited consolidated profit attributable to equity holders of the Company for the six months ended June 30, 2023 to increase by approximately 18% to 21% compared to the same period in 2022.

2) Sands China Limited (01928.HK): The Company announced that net income for the second quarter of 2023 was US$1.62 billion, an increase of approximately 3.4 times year-over-year, net income of US$187 million, compared to a net loss of US$422 million for the second quarter of 2022, and adjusted property EBITDA of US$541 million.

The company's financial report was announced

Today, no star companies in the Hong Kong stock market released their financial reports.

IPO dynamics

Today, there are no IPOs in the Hong Kong stock market.

A selection of company newsletters

1. Xtep International (01368.HK) disclosed its Chinese mainland business operation in the second quarter of 2023, and Xtep's main brand retail sales (including online and offline channels) achieved high double-digit year-on-year growth in the third quarter; The retail discount level is about 75% off. For the six months ended June 30, 2023, Xtep's main brand retail sales, including online and offline channels, achieved high double-digit year-over-year growth, with channel inventory turnover of less than five months.

2. Vinda International (03331.HK) announced its 2023 interim results, with a natural increase of 10.1% in revenue to HK$10.07 billion, representing a 4.0% increase in Hong Kong dollars. Profit attributable to equity holders of the Company is approximately HK$121 million, basic earnings per share are HK10.0 cents, and an interim dividend of HK10.0 cents per share is proposed. In terms of business segments, the tissue segment and the Personal Care segment accounted for 83% and 17% of the total revenue, respectively.

3. Sunny Optical Technology (02382.HK) announced that the Group expects to record a profit attributable to shareholders of the Company of approximately RMB407.4 million to RMB475.3 million for the six months ended June 30, 2023, a decrease of approximately 65% to 70% from approximately RMB1,357.9 million in the same period of the previous year.

4. China Ship Leasing (03877.HK) announced that it expects the comprehensive profit attributable to equity holders of the Company (unaudited) for the six months ended June 30, 2023 to increase by approximately 18% to 21% compared to the same period in 2022.

5. Sands China Limited (01928.HK) reported that Sands China's net income for the second quarter of 2023 was US$1.62 billion, an increase of approximately 3.4 times year-over-year, net income of US$187 million, compared to a net loss of US$422 million for the second quarter of 2022, adjusted property EBITDA of US$541 million, and adjusted property EBITDA loss of US$110 million for the second quarter of 2022.

Important news at home and abroad

1) The "Opinions of the CPC Central Committee and the State Council on Promoting the Development and Growth of the Private Economy" was released, making important statements on the positioning of the private economy and putting forward the "new force" for the first time. The opinions point out that the private economy is a new force for promoting Chinese-style modernization and an important foundation for high-quality development. It is necessary to increase support for private economic policies, improve financing support policies and systems, and support qualified private enterprises to go public for financing and refinancing. Regulate and guide the healthy development of private capital in accordance with the law. Improve the legal system to regulate and guide the healthy development of private capital, set up "traffic lights" for capital, improve the rules of capital behavior system, and focus on launching a number of "green light" investment cases.

2) According to data released by the Ministry of Finance, the deed tax revenue in the first half of the year was 312.1 billion yuan, a year-on-year increase of 5.1%; property tax was 194.6 billion yuan, an increase of 3.9%; The income from the transfer of state-owned land use rights was 1,868.7 billion yuan, down 20.9%.

3) In the first half of the year, Beijing's real estate development investment increased by 9.8% year-on-year, and the sales area of commercial housing was 5.229 million square meters, an increase of 17.2%, of which the residential sales area was 3.786 million square meters, an increase of 14.8%; Residential construction area decreased by 3.5%.

4) In the first half of the year, the major power generation enterprises in mainland China completed investment of 331.9 billion yuan in power projects, a year-on-year increase of 53.8%. Among them, solar power generation increased by 113.6%. As of the end of June, the cumulative installed capacity of power generation in the country was about 2.71 billion kilowatts, an increase of 10.8%; The total installed capacity of renewable energy power generation exceeded 1.3 billion kilowatts, accounting for about 48.8% of the total installed capacity.

5) UK inflation fell sharply in June after the US reported a lower-than-expected CPI last week, with an annualized rate of 7.9%, below consensus expectations. Economists had expected an annualized increase in the headline consumer price index of 8.2 percent, up from 8.7 percent in May, but the annualized price increase was still well above the Bank of England's 2 percent target.

6) The total number of new housing starts in the United States in June was 1.434 million annualized versus 1.48 million expected, revised from 1.631 million to 1.559 million in the previous month, and 1.44 million in construction permits versus 1.49 million expected, and revised from 1.491 million to 1.496 million in the previous month.

7) Eurozone June CPI final rose 5.5% year-on-year and 0.3% month-on-month; The final core CPI rose 6.8% year-on-year and 0.4% month-on-month, and the relevant data were in line with expectations and preliminary values.

Big bank ratings

1. Credit Suisse: Maintain Chinese Life (02628) "Outperform" rating with a target price of HK$17.5

2. Damo: "Overweight" rating to Xiaomi Group (01810) with a target price of HK$15

3. Daiwa: Reiterating Yuexiu Real Estate (00123) "Buy" rating with a target price of HK$12.4

4. Citi: "Buy" rating on Samsonite (01910) with a target price of HK$32

5. Citi: Samsonite has a first buy rating with a target price of HK$32

6. Zhongtai International: upgraded Higeia Medical (06078) to "overweight" rating, and adjusted the target price to HK$50.55

Author: Adder Financial Research

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