Evening Wrap: Market Climbs on Oscars, PCCW Hits Basketball Low
Mar 26, 2001 - 19:40:33 HKT
QuamResearch
The Hong Kong market on Monday was just a bee hive of activity, though perhaps a rather thinly populated bee hive, with a huge 367.13 point jump, 2.9%, to 12,950.49. Turnover was HK$8.894 billion, and gainers ruled the day. Properties gained 2.9%, exactly the same as the HSI, but the big movers were in the commercial and industrial sub-index which climbed a bit more than 4% overall.
Perhaps the Oscars were the impetus behind the rise? Despite the Gladiator slaying both the Crouching Tiger and the Hidden Dragon in the fight for best picture, the Chinese film still managed to grab four Oscars out of the 10 for which it was nominated. Besides the picture stories, perhaps one should give a little nod to everybody's favorite, Julia Roberts. Yes, Letterman's true love -- and one wonders if it's mutual? -- snagged Best Actress for her role in Erin Brokovich.
We see clear indications that the awards must have impacted the HK stock market in the absence of other direction, except for perhaps last Friday's rally in the U.S. markets, the rates cut finally being copied here in HK, and a few earnings announcements to sweeten things up.
Properties
Properties ended up quite strongly with the weakest of the bunch being Cheung Kong (1) and its $1.25, 1.55% rise to $81.75. Henderson (12) rose $1.40 or 3.7% to $39.50 and SHK (16) gained $2.50 or 3.4% to $75.25. Sino Land (83) gained 8.3% to $3.60. Non-property-sub-index but still a big property stock NW Development (17) rose 70 cents, 7.2%, to $10.40. Back to property, Wheelock (20) gained 55 cents to $7.45, a near 8% rise, while over in the C&I sub-index, subsidiary Wharf (4) gained $1.25 or 6.6% to $20.25.
The Wheelock / Wharf gains may have seemed somewhat confusing since Wharf released results that were down. Wharf's 2000 net profit fell 29.3% to $2.48 billion, but this was about in line with expectations with consensus prediction being $2.47 billion. The good part of the story was that revenue rose 14.3% to HK$12.02 billion. However, 1999's profit included a large exceptional gain from the i-Cable spin-off, and the outlook for 2001 looks quite nice. More about this tomorrow.
One possible take is that Hollywood directors will no doubt now be scouting for hot locations in Hong Kong and will bring expensive expat packages with them. It can only look up for local property tycoons and punters.
Banks / Financials
The banks were somewhat mixed but generally up with HSBC gaining some strength as investors ignored the sell signals coming from major brokerages. HSBC (5) rose $1.75 to $91.25 and was followed by Hang Seng Bank (11) which gained $2, 2.25%, to $90.75. BEA (23) was flat at $17.95, and Dao Heng (223) fell $0.90 to $36.70. Manulife (945) is a favorite and is not in the bank sub-index. The insurer dropped $3 to $192, and is getting more affordable again. At these prices, each of these financial plays are reasonable. HSBC added 63 points to the HSI's rise.
Techs / Telecoms / C&I Sub-Index
The major influence on today's C&I sub-index, and indeed the whole HSI with its 160 point contribution out of the total 269 plus, was China Mobile (941), which gained $2.20 or 6.6% to $35.50. Why, you ask? We figure it was it all those excited mainlanders phoning each other about the Oscar win. Another little tidbit: apparently, Crouching Tiger is the first Taiwanese movie to win Best Foreign Language Film and the first Asian film to be nominated for Best Picture. Unicom (762) also rose, but less spectacularly at 35 cents or 3.95% to $9.20. For both of these stocks, they took beatings last week -- Mobile dropped more than 13% -- so today's rises seem very much like a technical rebound, the province of speculators.
Li & Fung (494) gained more than 5% on the release of its 51% earnings growth in fiscal 2000. The stock ended up 65 cents to $12.75. Profit hit $870.4 million. Here's the bad news. First, it's almost exactly in line with expectations -- nothing special-- and the final dividend makes for a pretty pathetic dividend yield at these prices. Second, markets are supposed to look forward. What will happen next year when the company's numbers get decimated by the U.S. downturn? Great company, terrible market price. We maintain our position -- too much of premium for our red hot Hong Kong blood.
Finally, PCCW (8) fell 12.5 cents or 3.5% to a new 52-week low on the back of the weekend Stanford loss to Maryland. The Maryland Terrapins ripped past the top-seeded Stanford to win 87-73 on Saturday, dashing the hopes of many a dejected Cardinal. Yes, the Final Four is now out of the picture at the almost alma-mater. According to CNNSI, Stanford's Ryan Mendez said, "It seemed like the guys were just a little bit too relaxed ... When you look in their eyes, there should be a look, 'There's no way we're going lose this game.' I just thought that sometimes that look wasn't there."
Also possibly a factor in the fall was the upcoming results announcement for the little company that couldn't, with a possible loss in the Cards. The way the stock price is going, some pundits are now wondering if it'll finally level off at $3 -- one for every year completed.
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