1. Art and Diseño

Morning Flash
30 January 2015
Hong Kong/China Market
Technical Strategy
Indices
HSI
The daily market breadth of the Hang Seng Index shows that percentage of
constituents trading above the 250-day MAs (White line) has reached the HSI Future
over-bought region earlier this month…
DJIA
S&P 500
Latest
24,596
Chg. Pts
-266
24,563
-33
17,417
225
2,021
19
HSI Index, % Constituents trading above their SMAVG(250) and SMAVG(50)
26000
100.00%
90.00%
25000
80.00%
24000
70.00%
60.00%
23000
50.00%
22000
40.00%
30.00%
21000
20.00%
20000
10.00%
19000
0.00%
%> SMAVG(250)
Overbought
Oversold
%> SMAVG(50)
%> SMAVG(10)
HSI PX_LAST
Source: Bloomberg, VC Research
Trading outlook of the HSI may continue to be undermined by the
consolidation of market breadth in the near-term.
Hong Kong Market Review
The SHCOMP retreated three consecutive days, as market rumors
have it that the CSRC will step up measures to scrutinize illegitimate
margin leadings by brokerages and banks. Market news said that the
regulatory body plans to launch the new round of check next Tuesday.
However, it is clear that Beijing does not want to kill the equity bull at
its infancy and as such the CSRC announced that the margin check is
a routine work and investors should not “excessively interpret” the
motive of the move.
Mainland brokerages under pressure, As investors concerned
about a slower liquidity inflow to the equity market as brokerages and
banks will be restricted to downsize their margin scale. Haitong Sec
(6837.HK) was down 3.2% to HKD16.68/share, and Citic Sec
(6030.HK) slid 2.75% to HKD24.75/share. Mainland banks also came
under a new round of selling, with BOA (3988.HK) losing the most in
the big-four state commercial banks by 2.2% to HKD4.35/share.
Rebound in Macau gaming not sustainable, as a clear sign of
stabilization in GGR has not emerged. A Macau SAR official indicated
that monthly GGR in 2015 is expected to be within MOP23-28bn,
more or less in line with the GGR levels in 2H14.
Crude futures fell 2.4% on Wednesday. Locally listed crude-related
shares fell generally. Petrochina (857.HK) was down 2.1% to
HKD8.42/share.
© 2015 VC Brokerage Limited. All rights reserved. Opinions, projections and other information contained in this
report are based upon sources believed to be accurate, but no responsibility is accepted for any loss occasioned by
reliance placed upon the contents herein. Further information on the companies mentioned in this report is available
upon request.
NASDAQ
4,683
45
H-share
11,736
-228
Red-chip
4,505
-67
Shanghai Comp
3,262
-43
Shenzhen Comp
1,529
-9
Morning Flash
30 January 2015
Economic News
U.S. initial jobless claims fall to near 15-year low: The number of
Americans initially applying for unemployment aid fell sharply last
week, echoing an improving job market. In the week ending Jan. 24,
the advance figure of seasonally adjusted initial claims for jobless
benefits decreased to 265,000, 43,000 less than the revised level of
the previous week, the U.S. Labor Department said on Thursday. That
was the lowest level since April 2000 and better than the market
expectation of 300,000 new claims. There were no special factors
impacting this week's initial claims, said the department. Meanwhile,
the four-week moving average, which helps smooth out week-to-week
volatility, edged down by 8,250 to 298,500 last week. The advance
figure of seasonally adjusted insured unemployment during the week
ending Jan. 17 decreased 71,000 from the previous week to
2,385,000. U.S. economy adds 252,000 new jobs in December, and
the unemployment rate declined by 0.2 percentage point to 5.6
percent, the lowest level since June 2008, the Labor Department said
earlier this month. (Xinhua)
German Inflation Rate Is Negative for First Time Since 2009:
Germany’s inflation rate turned negative in January for the first time in
more than five years, aggravating a slump in consumer prices in the
euro area. Prices in Europe’s largest economy fell 0.5 percent from a
year earlier, the Federal Statistics Office in Wiesbaden said today.
That’s the lowest rate since September 2009. Economists predicted a
drop of 0.2 percent. The European Central Bank committed last week
to spend at least 1.1 trillion euros ($1.2 trillion) on government bonds
and other assets to avert deflation in the euro area. Prices in the 19nation bloc probably dropped this month at the second-fastest rate
since the introduction of the single currency. (Bloomberg)
German jobless rate hits record low in January: German jobless
rate fell for the fourth consecutive month in January and hit its lowest
level since German reunification two decades ago, official data
showed on Thursday. In seasonally adjusted terms, the number of
unemployed people fell by 9,000 to 2.84 million in January, German
Federal Labour Agency said. The adjusted jobless rate thus dropped
to 6.5 percent, following a rate of 6.6 percent in December last year.
"The labour market is linked to the good performance of last year,"
said Frank-Juergen Weise, chief of the Nuremberg-based labour
agency. In a separate report, German statistical office Destatis said
roughly 42.8 million people were in employment in December 2014.
The adjusted unemployment rate measured by concept of
International Labour Organization (ILO) in December fell to 4.8
percent from the 5.0 percent in previous month. (Xinhua)
Japan Inflation Slows More Than Forecast in Challenge to BOJ:
Japan’s inflation rate slowed more than forecast in December, adding
to central bank chief Haruhiko Kuroda’s challenges in reflating the
world’s third-biggest economy. Consumer prices excluding fresh food
rose 2.5 percent from a year earlier, the statistics bureau said Friday
in Tokyo. That was less than the median projection of 2.6 percent in a
Bloomberg News survey of economists. Stripped of the effect of
sales-tax increase last April, core inflation -- the Bank of Japan’s key
measure -- was 0.5 percent. (Bloomberg)
© 2015 VC Brokerage Limited. All rights reserved. Opinions, projections and other information contained in this
report are based upon sources believed to be accurate, but no responsibility is accepted for any loss occasioned by
reliance placed upon the contents herein. Further information on the companies mentioned in this report is available
upon request.
Morning Flash
30 January 2015
ECB QE to have "spillover effect" on China-EU trade: A Chinese
official said Thursday that the European version of quantitative easing
(QE) is set to impose a "spillover effect," positive and negative, on
China-Europe economic and trade relations. The remarks were made
by Ministry of Commerce (MOC) spokesman Shen Danyang at a
press conference days after the European Central Bank unveiled a
program to buy 60 billion euros (about 68 billion U.S. dollars) of
private and public bonds each month from March to ward off deflation
in the eurozone last week. While a depreciating euro could help
increase Chinese companies' import from Europe and reduce the cost
of investing in Europe, it is not good for Chinese exports, with existing
investment already made by Chinese firms facing risk of loss, Shen
told reporters. For the European economy, Shen said, the QE's
impact could be two-sided as well. (Xinhua)
Yuan sees increased volatility as depreciation pressure mounts:
The Chinese currency has seen sharp volatility against the U.S. dollar
this week as a strengthening dollar stokes worries of the yuan's
depreciation. The yuan continued to decline against the dollar on
Wednesday with its spot exchange rate closing at 6.2480 per U.S.
dollar, down 45 basis points from Tuesday, according to data released
by the China Foreign Exchange Trade System. The rate also dropped
almost 1.95 percent from the central parity rate, just short of the twopercent floatation band allowed by authorities. On Monday, the
Chinese currency sank to its lowest level in seven months by closing
at 6.2542 before rebounding to 6.2435 on Tuesday. (Xinhua)
Sector News
China's coal output suffers record fall last year: China's coal
output may have dropped 2.5 percent in 2014, the first fall since 2000,
according to an industrial report released on Thursday. Over 70
percent of the enterprises in the coal sector suffered losses last year,
according to a report by the National Coal Association (CNCA). Weak
demand, overcapacity and cheap imports have compounded the
sector's woes, said Jiang Zhimin, vice president with CNCA. China's
coal capacity is over four billion tonnes, with another one billion under
construction and amounts to over 90 percent of the country's total
energy resources. (Xinhua)
China steel industry struggles: Although China's steelmakers saw a
big rise in profits last year, the industry still has overcapacity problems
that have dragged prices to record lows. China's major large and midsized steel firms reported 30.4 billion yuan (5 billion U.S. dollars) in
profit in 2014, a sharp rise of 40.4 percent, the China Iron and Steel
Association (CISA) revealed on Thursday. The association attributed
the growth to lower fuel prices and cost cutting. Despite the rise, the
CISA cautioned that China's economic slowdown and optimized
structure is increasingly dampening appetite for steel products, adding
more pressure to a sector already struggling with overcapacity.
China's economy grew 7.4 percent in 2014, the weakest annual
expansion in 24 years. (Xinhua)
© 2015 VC Brokerage Limited. All rights reserved. Opinions, projections and other information contained in this
report are based upon sources believed to be accurate, but no responsibility is accepted for any loss occasioned by
reliance placed upon the contents herein. Further information on the companies mentioned in this report is available
upon request.
Morning Flash
30 January 2015
China's machinery sector faces overcapacity: China's machinery
industry faces overcapacity at the low end sectors and a lack of
capacity at the high end, head of the China Machinery Industry
Federation (CMIF) said Thursday. The biggest problem for the
industry is "structural overcapacity" -- huge capacity in low addedvalue sectors, said Wang Ruixiang, president of CMIF, the leading
association of China's machinery companies. Production capacity
utilization rate in some sectors is as low as 30 percent, he told an
industry meeting, warning that "industrial adjustment and upgrading is
the top priority." However, integration of Beijing with neighboring
Tianjin Municipality and Hebei Province, the "belt and road" initiative,
and Yangtze River economic belt are historic opportunities for the
machinery industry, Wang added. (Xinhua)
Result Announcements
Vinda International Holdings Limited (3331.HK) announced result
for the year ended 31 December 2014: Net profit: HK$593.467M, up
9.31% YoY Basic EPS: HK$0.594 Final dividend per share proposed:
HK$0.12 (Infocast)
Kith Holdings Limited (1201.HK) announced result for the first 6
months ended 30 June 2014: Net profit: HK$15.656M (HK$211.598M
net loss for the same period in 2013) Basic EPS: HK$0.0599 Interim
dividend proposed: nil (Infocast)
I.T Limited (0999.HK) announces that for the third fiscal quarter
ended 30 November 2014, its comparable-store-sales decline in the
Hong Kong market and the Mainland China market was 4.5% and
0.2%, respectively. Comparable-store-sales growth in the Japan
market was 13.5% for the period. (Infocast)
Luoyang Glass Company Limited (1108.HK) expects its annual
results for 2014 to turn around to a profit of RMB10-20 million from a
RMB98.981 million loss for 2013. The profit was mainly due to the
reasons that: (1) during 2014, the company realized a gain from the
disposal of equity interest in its subsidiary, Luoyang Luobo Industrial
Co., Ltd; and (2) Luoyang Glass received subsidies from the
government during 2014. (Infocast)
Auto Italia Holdings Limited (0720.HK) said it expects to record a
net profit for the year ended 31 December 2014, as compared with an
audited loss of HK$55.7 million for the year ended 31 December
2013. (Infocast)
China Automation Group Limited (0569.HK) announces that it
expects the company's profit for the year ended 31 December 2014 to
decrease significantly as compared with the profit recorded by the
company for the year ended 31 December 2013. (Infocast)
China COSCO Holdings Company Limited (1919.HK) announces
that the group expects to record an increase of more than 50% in
profit attributable to equity holders of the company for the year ended
31 December 2014 as compared to the profit attributable to the equity
holders of the company of RMB235.47 million for the year ended 31
December 2013. (Infocast)
© 2015 VC Brokerage Limited. All rights reserved. Opinions, projections and other information contained in this
report are based upon sources believed to be accurate, but no responsibility is accepted for any loss occasioned by
reliance placed upon the contents herein. Further information on the companies mentioned in this report is available
upon request.
Morning Flash
30 January 2015
Today’s Theme
The China’s State Council plans to facilitate the exports of railway, nuclear and construction materials products,
echoing President Xi Jinping’s vow to develop a “New Silk Road”. Mainland nuclear names fared well across the
board yesterday a result of the favorable policies to be implemented by Beijing.
DongFang Elec (1072.HK)
•
Rising momentum has
been strong. DongFang
Elec looks set to break
away from an ascending
channel.
•
Staying above all major
MAs is a good sign.
•
A
psychological
resistance
stands
at
HKD17/share.
Source: Bloomberg, VC Research
Harbin Elec (1133.HK)
Source: Bloomberg, VC Research
© 2015 VC Brokerage Limited. All rights reserved. Opinions, projections and other information contained in this
report are based upon sources believed to be accurate, but no responsibility is accepted for any loss occasioned by
reliance placed upon the contents herein. Further information on the companies mentioned in this report is available
upon request.
•
Shot through the ceiling of
a
narrowing
triangle
earlier this month.
•
The 14-day RSI has
retreated after hitting the
over-bought region.
•
May test a psychological
resistance at HKD6/share
soon.
Morning Flash
30 January 2015
Shanghai Elec (2727.HK)
Source: Bloomberg, VC Research
Hang Seng Composite Sectors
Sector
Hang Seng Index (HSI)
Hang Seng Composite
HSCI Utilities
HSCI Industrial Goods
HSCI Materials
HSCI Conglomerates
HSCI Telecommunication
HSCI Property & Construction
HSCI Info Technology
HSCI Consumer Goods
HSCI Financials
HSCI Services
HSCI Energy
HS Mainland 100
HS China Enterprises
HS China H-Financial
HS China Affiliated Corps
HS HK 35
HS HK Large Cap
HS HK MidCap
HS HK Small Cap
Index
24,595.85
3,354.46
Day (%) Week (%) MTD (%)
-1.07
0.30
4.20
-0.98
0.13
2.67
YTD (%)
4.20
2.67
7,757.80
1,293.26
5,329.11
2,956.53
2,146.08
3,066.72
5,870.23
4,736.44
3,688.92
3,998.91
9,650.52
-0.11
-0.34
-1.39
-0.14
0.15
-0.84
-1.27
-0.08
-1.61
-0.36
-1.78
1.25
2.33
-2.70
2.05
0.39
0.55
2.19
0.95
-1.18
4.03
-2.64
3.23
2.47
-1.94
7.95
12.75
3.25
14.92
1.55
-0.55
1.00
-2.41
3.23
2.47
-1.94
7.95
12.75
3.25
14.92
1.55
-0.55
1.00
-2.41
7,450.04
11,736.09
17,965.20
4,504.91
-1.32
-1.90
-1.98
-1.46
-1.23
-2.58
-2.74
-1.33
2.66
-2.07
-2.50
3.56
2.66
-2.07
-2.50
3.56
2,818.49
2,009.67
4,466.07
2,241.05
-0.41
-1.05
-0.79
-0.67
2.74
0.21
-0.24
0.17
5.06
3.50
-0.05
-0.25
5.06
3.50
-0.05
-0.25
Source: Bloomberg
© 2015 VC Brokerage Limited. All rights reserved. Opinions, projections and other information contained in this
report are based upon sources believed to be accurate, but no responsibility is accepted for any loss occasioned by
reliance placed upon the contents herein. Further information on the companies mentioned in this report is available
upon request.
•
Bumped upwards since
2Q14 on surging volatility.
•
Trading volume increased
noticeably over the last
few months is a good
sign.
•
A key resistance lies at
HKD5.14/share, the peak
since 2010.
Morning Flash - 30 January 2015
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compensation was, is, or will be, directly or indirectly, related to the specific
recommendations or views expressed by that research analyst in the research report.
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T
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© 2014 VC Brokerage Limited. All rights reserved. Opinions, projections and other information contained in this report are based upon sources believed to be
accurate, but no responsibility is accepted for any loss occasioned by reliance placed upon the contents herein. Further information on the companies mentioned in this
report is available upon request.