KGI Asia Commentary

2023.06.20 09:00

Hang Seng Index fell 127 points on Monday

HKD-RMB Dual Counter Model launched yesterday, while Hong Kong stock market fell generally. The HSI fell 314 points in mid-day and then gradually recovered the lost. It closed at 19,912, down 127 points or 0.6%. The HSTECH closed at 4,178, down 55 points or 1.3%. The HSCEI fell 56 points, or 0.8%, to 6,776. Market turnover was HK$103.0bn. China-tech stocks fell in general. Tencent (0700), Alibaba (9988), Meituan (3690) and JD.com (9618) fell between 0.7% and 2.1%. Domestic demand stocks fell as well, Anta (2020) and Li Ning (2331) both fell around 4.0%.

BoE stress-tests entire financial system

In the United Kingdom, absorbing the liquidity squeezed due to the sudden interest rate hike last year, the Bank of England said yesterday that it has launched the liquidity stress test for the entire financial system. Unlike previous stress tests on a single one institution, this one assesses the entire financial system, including references to hedge funds and pension funds, to gauge under what circumstances the UK's financial stability will be collapsed.

U.S. financial markets closed Monday for a holiday.

Positive signal from China-U.S. meeting

The tense relationship between China and the U.S. may be slightly relaxed. Yesterday, President Xi Jinping met with US Secretary Blinken and said that the previous agreements with the U.S. are going to be reached. Both sides have sent signals of willingness to reconcile, while Blinken said that the “spy balloon” incident has come to an end, and that both the United States and China believe that it is necessary to stabilize their relationship. On the other hand, Chinese Foreign Ministry officials also believe that the meeting between Blinken and President Xi Jinping is a starting point to avoid their relationship will be further deteriorated.

Hong Kong Stock Connect had a net inflow of HK$7.11bn on Monday, among which Tracker Fund (2800) had the largest net inflow of HK$5.89bn; followed by Hang Seng China Enterprises (2828). Tencent (0700) recorded the largest net outflow of HK$1.07bn, followed by Meituan (3690).

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China Telecom
00728

Operating revenues of the Company amounted to RMB481.4bn, representing an increase of 9.5% over last year. EBITDA amounted to RMB130.4bn, increased 5.2% yoy. Net profit amounted to RMB27.6bn, increased 6.3% yoy. In 2022, mobile communications service revenues amounted to RMB191.0bn, representing an increase of 3.7% over the last year, maintaining favorable growth. The penetration rate of 5G package subscribers reached 68.5% and mobile ARPU grew 0.4% yoy reaching RMB45.2. The Company is moving forward with its “Cloudification and Digital Transformation” strategy, stepping up the construction of intelligent and comprehensive digital information infrastructure, and actively building the industrial ecologies of 5G, cloud computing, cybersecurity, artificial intelligence and industrial intelligent manufacturing. The company expects to record a 70% growth of the Cloud revenue. That say, the Company has stable core business, coupled with emerging businesses that are bringing in new growth potentials. The full year dividend of 2022 amounts to RMB0.196 per share, represents the payout ratio to be at 65% of the profit attributable to equity holders of the Company for the year. Management is confident it can post double-digit profit growth this year, implying a higher dividend per share for the year. Target price: $5.2; Stop- Loss price: $3.6.

Wen Kit Kenny is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/AJF244/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.

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