Stock Market Outlook
Due to rising commodity prices and the US government’s upcoming US$1.9 trillion rescue plan, investors are beginning to worry about the return of bills, which will push US debt yields up, global stock markets have plummeted, and technology stocks have fallen sharply. In addition, the U.S. Treasury Secretary said on Friday that the U.S. will actively participate in the OECD negotiations on digital economy tax reform, which is also bad for technology stocks.
Since the historical high in intraday trading on February 16, the standard index and the Nasdaq index have fallen by 3.5% and 6.9% respectively. Since the intraday high on February 18, the Shanghai Stock Exchange Index and Shenzhen Growth Enterprise Market Index have fallen by 6.0% and 16.2%, while the Hang Seng Index and Hang Seng Technology Index have fallen by 7.1% and 18.6%, respectively. Local banks that are highly correlated with the Hong Kong economy during the period , Real estate and public utility stocks rose, indicating the continued rotation of the sector. In the past three trading days, Southbound Southbound funds have accumulated a net sale of 25.9 billion yuan, reflecting that mainland investors have become more cautious about Hong Kong stocks. It is expected that stocks that have been excessively speculated by Beishui in the early period are still under downward pressure, especially when they are kicked out of the Hang Seng Technology Index. Constituent stocks.
Last Friday the U.S. 10-year bond yield fell from 1.6% to 1.4%. The Nasdaq closed up. It is expected that Hong Kong stocks will stabilize in the short term. The market outlook depends on the trend of U.S. bond yields and the performance of domestic stock markets. The next technical support for the HSI is at 28,000 points, namely A 10% correction from the intraday high of 31183 on February 18 should attract medium and long-term investors to enter the market.
Today’s recommendation is Xiaomi (1810) — Xiaomi is the HSI component stock with the largest decline in February, falling 29.5% from the intraday high of 35.9 yuan on January 5, and the 9-day relative strength index fell to 29, showing a technical oversold , If Hong Kong stocks stabilize, there should be a technical rebound. It is recommended to buy with a target price of 28.0 yuan and a stop loss price of 24.0 yuan.
2) Summary of China and Hong Kong stock markets
On Friday, the Hang Seng Index opened lower by 662 points and rebounded in the early stage. The decline narrowed to 495 points, and then fell back and closed at a low level throughout the day. It closed at 28980 points, down 1093 points or 3.6%, and its turnover increased by 25% on a daily basis to 320.2 billion yuan. , The average daily turnover in February was 233 billion yuan. Southbound Southbound funds sold 7.6 billion yuan, including net sales of 2.7 billion yuan in Hong Kong Stock Exchange (388) and 1.2 billion yuan in Meituan (3690) shares. In February, net purchases were 74.9 billion yuan, an average of 5.8 billion yuan per day. Net purchases were 310.6 billion yuan in January, with an average daily average of 15.5 billion yuan. For the week, the Hang Seng Index fell 5.4%. For the whole month, the Hang Seng Index rose 2.5%.
Blue chip stocks rose 2 to 49 and fell 1 to remain unchanged. China Resources Land (1109) and China Gas (3) rose less than 1%, being the blue chips with the biggest gains. Local banks, real estate and utility stocks fell less. HSBC Holdings (5), Bank of China (2388), CLP Holdings (2) and Sun Hung Kai Properties (16) fell less than 1%. Meituan (3690), WuXi Biologics (2269) and CNOOC (883) fell more than 8%, 7% and 6% respectively, being the blue chips with the largest declines. Budweiser Asia Pacific (1876), Xiaomi (1810), Anta Sports (2020), Hong Kong Stock Exchange (388), Geely Automobile (175), Sunny Optical (2382), CKH Holdings (1) and Sinopec (386) fell more than 5%. For the entire month, Xiaomi (1810), Geely Automobile (175) and WuXi Biologics (2269) fell 11%-13%, making them the worst performing blue chips. Zhongsheng Pharmaceutical (1177), Galaxy Entertainment (27) and CNOOC Limited 883) rose 19%-21%, the best performing blue chip.
The Hang Seng Technology Index fell 5.7%, and constituent stocks fell across the board. Large technology stocks were among the top decliners. Meituan (3690), NetEase (9999) and Kuaishou Technology (1024) fell more than 8%. Weimob (2013), ZhongAn Online (6060) and Xindong Company (2400) fell 10%-11%, being the largest decliners. ASM Pacific (522), Maoyan Entertainment (1896), Kingsoft (3888) and Hua Hong Semiconductor (1347) fell 7%-9%. Mingyuanyun (909) and China Reading Group (772) fell more than 6%. Mobile phone component stocks AAC Technologies (2018) and BYD Electronics (285) fell more than 2%, being the best performing constituent stocks. For the whole week and the whole month, the Hang Seng Technology Index fell 15.2% and 4.3% respectively.
In terms of sectors, the performance of Chinese financial stocks kept pace with the market. Mainland property and property management stocks performed divergently. Large technology stocks, chips, software, biomedicine, sporting goods, gaming, non-ferrous metals, oil and aviation stocks underperformed the market. Li Ning (2331) fell more than 7%. Wynn Macau (1128) and SJM Holdings (880) fell more than 6%. Zijin Sulfur (2899) and Jiangxi Copper (358) fell more than 11% and 7% respectively. Air China (753) fell more than 8%.
On Friday, the Shanghai Composite Index opened lower by 2.0%. The early rebound narrowed the decline to 1.0%, and then it softened, closing at 3509.07 points, down 2.1%. The Shenzhen Component Index fell 2.2%, and the Science and Technology 50 Index fell 1.8%. The total turnover of the Shanghai and Shenzhen markets was about 910 billion yuan (RMB · the same below), a decrease of about 20 billion yuan from the previous month. Northbound funds for Shanghai and Shenzhen Stock Connect were sold at a net 5.6 billion yuan, a net purchase of 41.2 billion yuan in February, and a net purchase of 40 billion yuan in January. For the week, the Shanghai Stock Exchange fell 5.1% and the Shenzhen Stock Exchange fell 8.3%. For the entire month, the Shanghai Composite Index rose 0.7%, and the Shenzhen Composite Index fell 2.1%.
3) Macro/Industry News
China’s official manufacturing PMI in February was 50.6 (previous value 51.3), official non-manufacturing PMI was 51.4 (previous value 52.4), and the composite PMI output index was 51.6 (previous value 52.8). Wind data shows that the agency expects an average of 50.7 for the official manufacturing PMI in February and 52 for the official non-manufacturing PMI. (Wind)
The US Personal Consumption Expenditure (PCE) price index rose 0.3% month-on-month and 1.5% year-on-year in January. During the period, the core PCE price index increased by 0.3% month-on-month, which is expected to increase by 0.2%; and 1.5% year-on-year. (Journal)
The Hang Seng Index announced the results of its quarterly review on Friday. Two consecutive quarterly reviews have increased the number of blue chips. This time it has added 3 more, bringing the total number of blue chips to 55. Ali Health (241), Longfor (960) and Haidilao (6862) became the upstarts in the HSI. The Hang Seng Technology Index includes Haier Smart Home (6690) and GDS (9698), excluding Qiuti Technology (1478), Maoyan Entertainment (1896), Xindong (2400) and Yixin (2858), and the number of constituent stocks has changed from 32 For 30 only. The above changes will take effect on March 15. (Journal)
4) Stock information
Shenzhen International (152) announced plans with Kunpeng Capital to acquire Suning.com (002024.SZ) for a total of 2.141 billion shares at RMB 6.92 per share, accounting for 23% of the total share capital of Suning. This is equivalent to RMB 14.818 billion. After the completion of the transaction, Kunpeng Capital will hold 15% of Suning.com’s shares and Shenzhen State will hold 8%. (Journal)
CITIC Securities (6030) announced the proposed simultaneous rights issue of A and H shares. The basis of the rights issue is 1.5 shares for every 10 shares. It is expected to raise up to 28 billion yuan. The group stated that the rights issue plan was approved by the board of directors held on the 26th. The resolution will be effective within one year, but it will still be implemented after approval by the shareholders meeting and the China Securities Regulatory Commission. (Journal)
Country Garden Services (6098) issued a positive profit alert and expects that its profit for the year ending last year will increase by more than 50% year-on-year, mainly due to the increase in the area under management of the group’s property management and the combined increase in revenue from community value-added services and urban services; a profit of 1.671 billion in the same period in 2019 Yuan Renminbi. (Journal)
Gome Retail (493) issued a profit warning. It is expected that as of the end of last year, it will lose 6.5 billion yuan to 7.2 billion yuan for the year; the 2019 loss will be 2.59 billion yuan. The increase in losses throughout the year was mainly due to the outbreak of the novel coronavirus last year, which disrupted many industries in China and affected the business of the group. (Journal)
CNOOC (883) announced that the New York Stock Exchange posted a message on its website on the 26th last month, stating that the company is no longer suitable for listing, and the regulatory authorities have decided to initiate the delisting procedure for its American Depositary Shares (ADR). The New York Stock Exchange will suspend CNOOC ADR trading after the US stock market closes on the 9th of this month.
Stock Market Outlook - /10