Week in Review: Mobile, Bank Edge Up HSI, PCCW Gains on Papa Partner
Feb 23, 2001 - 17:26:31 HKT
QuamResearch
A softer, happier Friday managed to let HK punters regain a bit of respect, yet with the general trend still being down, their children's pocket money is still at risk of being diverted to grown-up purposes. The HSI closed Friday up with a stronger-than-average surge on the back of HK$11.3 billion turnover, gaining 181.92 points to 15,280.56.
However, the market is still down for its third week in a row despite today's bounce. The HSI is 350 points lower than the previous Friday's 15,630 for a 2.2% week-on-week decline.
Main stories included the surprise Monday suspension of and news about the opening of the mainland's B share market, huge declines in the Nasdaq combined with mixed economic data in the middle of the week, and topping it all off, today's father-and-son business tie-up with the surname in question being "Li."
Previous Friday: -126 to 15,630
Monday: -139 to 15,490 -- H shares, red chips move on B share news
Tuesday: +36 to 15,527
Wednesday: -176 to 15,351 -- Nasdaq woes
Thursday: -253 to 15,096
Friday: +182 to 15,280
Summary: 568 points lost, 218 points regained, net 350 points down.
Properties
Properties saw mixed performances on the day with no specific news driving the sector, but as investors circulated through other categories, they kept coming back to the traditional favorite with the government's intervention in the market via decreasing new supply serving as a reminder why to invest. As long as the government remains the servant of its true master -- the property tycoon aid and development fund -- this sector will probably always have a little in the form of extra aces. Cheung Kong (1) dropped $1.25 to $94 mainly on the back of Hutchison -- more about that later. Henderson (12) was up $1.40 or 3.1% to $47.20 and SHK (16) managed a $1.75 rise to $84.25. NW Development (17) rose 40 cents, 3.1%, and appears firmly back in the teens at $13.20.
Banks / Financials
Three sub-index financials gained while the fourth, Dao Heng (223), fell, $0.10 to $40.90. HSBC's (5) $1.50 rise to $117 was a good portion of the index's Friday rise, contributing 54 points to the total. Banks generally moved up for the week, and they should be solid long-term buys at their current prices. The recent spate of earnings announcements (not really a "spate" though) has left bank punters wondering exactly what is going to happen in terms of previous provisions. The expectation was for huge cuts, but not all have obliged.
Second-tier IBA (636) releases results over the weekend, and HSBC and Hang Seng do so on Monday. In anticipation, IBA rose 3.5 cents to $2.205 today.
Techs / Telecoms / Industrials
China Mobile (941) gained back $1.20 or 2.8% to $43.40 and in doing so drove the HSI 87 points up. Smaller competitor Unicom (762) rose in sympathy, 30 cents to $11.65. However, there was no significantly positive news regarding the sector or the stock to drive it up on the last day of the week, and it appears mainly the result of bargain-hunting. However, we believe both stocks are still rather expensive.
Hutchison (13) fell $1 to $90.70 on very strong trade of HK$1.64 billion. This set the HSI back 16 points. This was in part a reaction to the continued Nasdaq and telecom weakness, especially with its profits from the Voicestream sale in danger due to the slide in Deutsche Telekom shares, but today's large sell-off also suggests some institutional reshuffling. With Hutchison in this range, and considering it is about 60% above its book value, the company should be a reasonable long-term buy, unless its telecom investments come back to haunt it. However, investors need to remember that this price doesn't offer the traditional "margin of safety," so we could still see further downward fluctuation. Nevertheless, this company's overall future looks solid, and unless its top leadership becomes impaired, this is virtually an essential component of a portfolio.
The same cannot be said for PCCW (8), despite news today of Hutch taking a small stake and apparently giving them a huge, half-billion dollar loan in the process. Only if the older Li takes over young Richard Li's company can PCCW shareholders truly breathe more freely, but that might not happen, and even if it did, three conglomerates might be too much for one man. PCCW gained 17.5 cents, 4% on the day to $4.55 but is still 1.6% down for the week. And the C&W share overhang will still not go away.
H-Shares / Red Chips
H-shares ended Friday up another 4.2% as both PetroChina (857) and Sinopec (386) gained, 3 cents or 2.2% to $1.40 and 6 cents or 4.8% to 1.31 respectively. Of the 51 H shares, all but three were in positive territory, and even two of the three laggards did no less than close unchanged. The top players, of course, jumped rather dramatically. Whether they can hold on to their gains, however, is another matter. Viewing the week and year percentage change, it is clear that the segment was dormant for a while before exploding this week. Whether it will continue is uncertain, but we remain confident that a number are still undervalued, and the two listed above are in our consideration of reasonable shares that will continue to benefit, even without the aid of an A and H share merger.
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