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1、,Research Department6 September,2012HK Market Monthly Outlook and Sector UpdateSummaryMonthly Market DataMonthly Market ReviewSector PerformanceMarket OutlookChina,US and Europe Macro Economic DataTop picks in Sectors under GTJA International CoverageSectors Monthly UpdateAviationAutomobiles&Compone
2、ntsBankingCement and Construction MaterialsCoalConsumer ApparelConsumer HotelsConsumer-Foods&beverage and household productsConsumer RetailingElectric EquipmentElectricityHealth careInfrastructureInsuranceInternetMachineryNew energyNonferrous MetalsOil&Gas,PetrochemicalsPortPrecious MetalsPropertySh
3、ipping and LogisticsSteelTelecommunications EquipmentTelecommunications ServicesToll roads,See the last page for disclaimer,page 1 of 33,SummaryAs of Aug 31,HK market showed an unfavorable performance with HSI down 1.58%and HSCEI down 4.07%respectively.Mainfactors to weigh on the market included the
4、 implications made on the latest policy meetings from the ECB and US Fed and also theconference at Jackson Hole,on-track economic recovery in the US,weak economy in Europe however along with relatively quietnews from the debt crisis and Chinas continuous slowing economic growth.Several recent signal
5、s have indicated the further easing policies from the US might come soon.But the timing of new policies mightbe still somewhat uncertain due to its relatively on-track economic recovery.Anyhow,the expectations on policy easing areexpected to be still in place in the near term and support the market.
6、We expect more signs to be shown in Sep for the market to judge the progress of resolving the debt crisis,compared with little bigrelated news coming out in Aug.The ECBs policy moves or hints,international creditors assessment of Greeces deficit cut,approval of starting the ESM are all important eve
7、nts to affect the market confidence.Chinas short-term economic data might continue to indicate signs of slowdown,but favorable policies help to stabilize the economygradually.Economic slowdown might not end yet in the short term,which is negative to the market.But the favorable policiesreleased or t
8、o be released could help to stabilize the economy gradually,despite it takes time for those polices to have obviouseffects on the economy.We expect the economic growth to bottom out in 2Q-3Q.Investors can now better judge the earnings outlook,as most of HK-listed companies have released their interi
9、m results,removingone of the previous market uncertainties.Its expected that investors could be more willing to purchase certain sectors or stockswith more visible and better fundamentals.We maintain views that the market may come under pressure from lackluster European economic data and slowdown of
10、 Chinaseconomic growth in the short term and may continue to fluctuate.Despite the slowdown of global economic recovery,with thedecreasing uncertainties from Europe,the expectation on the possible liquidity injection from the US,and Chinas policy measuresto stabilize its economic growth,we are still
11、 bullish on the longer-term market and corrections will create opportunities.Top picks in sectors under GTJA International coverage as of Sep.2012,SectorsAutomobileBankingCementCoalConsumer-ApparelConsumer-HotelsConsumer-Foods&beverageConsumer-Foods&beverageConsumer-RetailingElectricityHealthcareInf
12、rastructureInternetMachineryMachineryPetrochemicalsPortPrecious metalsPropertyPropertyToll roads,Company nameBrilliance AutoChina CITIC BankBBMGChina ShenhuaBelleChina LodgingChina Modern DairyChina FoodsIntimeChina Power INTLSinopharmChina Railway GroupBaiduHaitian IntlZoomlionSinopecCOSCO PacificZ
13、haojin MiningChina OverseasCR LandZhejiang Expressway,Code01114 HK00998 HK02009 HK01088 HK01880 HKHTHT US01117 HK00506 HK01833 HK02380 HK01099 HK00390 HKBIDU US01882 HK01157 HK00386 HK01199 HK01818 HK00688 HK01109 HK00576 HK,RatingAccumulateBuyAccumulateAccumulateBuyBuyAccumulateBuyBuyBuyBuyAccumula
14、teBuyBuyBuyAccumulateBuyBuyBuyBuyAccumulate,6 to 18m TP(HKD)Remarks9.00 Replace 175 HK5.82 maintained7.50 maintained34.20 maintained16.74 maintainedUS$16.20 Replace SVN US2.47 Newly added8.40 Newly added10.15 maintained2.73 maintained28.80 Replace 1666 HK3.83 maintainedUS$200.00 maintained8.30 maint
15、ained11.20 Newly added8.45 maintained12.90 maintained10.20 maintained20.50 maintained18.88 maintained6.22 maintained,Source:Guotai Junan International,See the last page for disclaimer,page 2 of 33,n.a.,Monthly Market Data,chg%,chg%,Indicator,31 Aug.,2012,mom,yoy,Remarks,HSI,19,482.57,(1.58),(5.12),M
16、onthly money net flows to HSI,HK$(548.42)mn,(95.27),net inflows turned into net outflows mom.Netoutflows largely narrowed yoy.,HSI forward PEHSI forward PBHSCEIMonthly money net flowsto HSCEIHSCEI forward PEHSCEI forward PBDaily average turnoverAH Premium Index,10.391.289,280.25HK$(1,346.85)mn7.711.
17、17HK$43,718.33 mn108.62,(0.57)(1.79)(4.07)n.a.(1.47)(4.24)2.311.74,(5.12)(10.53)(15.20)(72.78)(13.97)(21.53)(44.39)0.46,below the avg PE of 14.23 from 2006 to 2011below the avg PB of 1.87 from 2006 to 2011net inflows turned into net outflows mom.Netoutflows largely narrowed yoy.below the avg PE of 1
18、3.65 from 2006 to 2011below the avg PB of 2.22 from 2006 to 2011Lower than the avg of 121.29 since the beginning of2006,Source:Bloomberg,Guotai Junan InternationalMost Active Traded Stocks,By Turnover(HK$bn),By Volume(billion),Stock Code Stock Name941 HK CHINA MOBILE939 HK CHINA CONST BA-H1398 HK IN
19、D&COMM BK-H883 HK CNOOC LTD700 HK TENCENT HOLDINGS3988 HK BANK OF CHINA-H5 HK HSBC HLDGS PLC857 HK PETROCHINA CO-H2628 HK CHINA LIFE INS-H2318 HK PING AN INSURA-H,Turnover ofSharesTraded37.9723.3220.9719.0118.9816.5016.2316.1113.8413.73,Stock Code Stock Name3988 HK BANK OF CHINA-H1398 HK IND&COMM BK
20、-H939 HK CHINA CONST BA-H1288 HK AGRICULTURAL-H3800 HK GCL-POLY ENERGY728 HK CHINA TELECOM-H857 HK PETROCHINA CO-H386 HK CHINA PETROLEU-H883 HK CNOOC LTD,Volume ofSharesTraded5.584.724.402.201.881.741.671.391.25,494 HK13 HK1 HK16 HK1299 HK386 HK,LI&FUNG LTDHUTCHISON WHAMPOCHEUNG KONGSUN HUNG KAI PRO
21、AIA GROUP LTDCHINA PETROLEU-H,12.0412.0111.8811.6410.8810.21,Source:Bloomberg,Guotai Junan InternationalNote:only those under our coverage or as HSI and HSCEI constituentsare picked from the top 20 list,Source:Bloomberg,Guotai Junan InternationalNote:only those under our coverage or as HSI and HSCEI
22、 constituentsare picked from the top 20 list,See the last page for disclaimer,page 3 of 33,Monthly market review and short-term market outlook,Shirley Gu,Grace Liu,Monthly Market Review.As of Aug 31,HK market showed an unfavorable performance with HSI down 1.58%andHSCEI down 4.07%respectively.Main f
23、actors to weigh on the market included the implications made on the latest policymeetings from the ECB and US Fed and also the conference at Jackson Hole,on-track economic recovery in the US,weak economy in Europe however along with relatively quiet news from the debt crisis and Chinas continuous sl
24、owingeconomic growth.The US Fed didnt introduce any new specific policy at the latest FOMC meeting,in line with our expectation.TheECB also decided to maintain the current policies at the latest policy meeting,falling short of expectations and alsodisappointing the market once.But both of them impli
25、ed to consider additional accommodation or certainnon-standard policies in the future when necessary,still leaving the door open to further policy easing.Bernankesspeech at Jackson Hole indicated the effectiveness of previous easing policies and concerns towards the economicoutlook.Therefore,the exp
26、ectation on further easing policies is still in place.Most of the latest economic data in the US was positive,showing its on-track recovery.Nonfarm payroll increase inJuly was 163,000,far better than the expected 100,000 and also the largest within the recent 5 months.The retailsales,university of M
27、ichigan consumer confidence,durable orders,indicators related to its housing market such asnew home sales and S&P/Case-shiller housing index were all better than expectations.Annualized GDP qoq growthin 2Q was revised upward to 1.7%compared with the preliminary estimate of 1.5%,in line with expectat
28、ions.PMI in Aug of Euro-zone and core nations such as German and France witnessed slight rebounds from theover-3-year low in July,however still at low levels ranging from 43 to 46.Euro-zones 2Q GDP fell by 0.2%qoq,down0.2 ppt from 1Q12.Several European countries also saw the slower growth or larger
29、decline of GDP in 2Q,pointingto the overall weak economy.Another two local governments in Spain asked for the financial aid from the centralgovernment,indicating the difficulty to get external financing from the market.Chinas economic growth is still expected to be at the bottom as showing in the ec
30、onomic data of July and PMI ofAug.Compared with June,yoy growth of real retails sales rose slightly and overall FAI slowed slightly,with thegrowth of property investment slowing for the second consecutive month and decline of railway investmentnarrowing for the third straight month.Imports and expor
31、ts were largely lower-than-expected.Industrial productiongrowth decelerated for the second straight month.But the bright spot was inflation eased with CPI growth falling tothe lowest since Jan 2010.Official PMI in Aug slid to 9-month low of 49.2 and HSBC PMI fell to the lowest of 47.6since Mar 2009.
32、Little negative news came from European debt crisis in Aug,despite no obvious progress made on resolving thecrisis either,providing investors with a breathing space.In addition,the market had been expecting certain favorablepolicies introduced by top leaders in major countries,pushing major US indic
33、es to post-crisis peak and Europeanindices to the highs since the end of June.Sector Performance.Sectors significantly outperformed or underperformed the market in recent one month are listed asfollows:,Sector,Underperform Relative return/Outperform to HSI(ppts),Reasons,See the last page for disclai
34、mer,page 4 of 33,13.44,Three economy chain hotel operators under coverage posted,Consumer-Hotels,Outperform,19.30*,better-than-expected 2Q12 results.In addition,US market where thecompanies under our coverage are listed recorded a better performance,than HK market,also boosting the investor sentimen
35、t.Sector performance was mainly led by Tingyi(322 HK)and,Consumer-Foods&Beverage Outperform,Uni-president China(220 HK).Both posted favorable interim results,inwhich both witnessed expansion of gross margins.Certain companies under coverage posted favorable interim results and,Health care,Outperform
36、,8.91,the whole sector is thought to have better earnings outlook driven by the,steady demand,against the backdrop of Chinas economic slowdown.Most of companies delivered weak-than-expected interim results,Shipping&LogisticsAviationInfrastructure,Underperform(11.92)Underperform(11.81)Underperform(9.
37、01),demonstrating weak sector demand and rising costs(such as from theincrease of oil price)Three operators delivered unfavorable results with net profit down60%-80%yoy,mainly dragged by rising fuel costs,RMB exchange lossand also insipid revenue growth.The stimulating polices to stabilize the econo
38、my,from central to localgovernment havent shown obvious effects yet.Three companies withinfrastructure as the main business posted both yoy decline in revenue,and net profit.Therefore,sector witnessed an unfavorable performanceon the lack of catalysts.Source:Bloomberg,Guotai Junan InternationalNote:
39、Closing prices are as of Sep 4th.*Outperformed NASDAQ by 16.8ppt(all stocks in this sector under our coverage are listed in the US)Market outlookThe USs possible further easing monetary policies are some of the main market focuses in Sep.Several recentsignals have indicated the further easing polici
40、es might come soon,including the statements made on the FOMC meetingin Aug and on Jackson Holes speech,and also the talks from some officials of the Fed.However,as most of the USslatest indicators continue to point to its relatively on-track recovery,we expect the timing of new policies to be stills
41、omewhat uncertain(maybe the Fed wont take fresh actions at the meeting on Sep 12-13).Compared with relativelyaggressive stimulating polices such as QE,there might be more chance that some moderate policies such as extendingthe period of low interest rate to be introduced first.Anyhow,the expectation
42、s on policy easing are expected to be still inplace in the near term and support the market.We expect more signs to be shown in Sep,so that the market could better judge the progress of resolving thedebt crisis,compared with little big related news coming out in Aug.The ECB said to consider undertak
43、ing open marketoperations of adequate size and further non-standard policies when necessary,and also might issue new SMP guidancesoon.We expect ECB to at least drop more hints on how to ease the financial difficulties faced by certain strugglingcountries if it decides not to introduce new policy at
44、the policy meeting on Sep 6.International creditors plan to resume theassessment of Greeces deficit cut in Sep,which is expected to have major impacts on whether Greece can get furtherbailout fund.Germans constitutional court is scheduled to judge the legitimacy of ESM on Sep 12,and the outcome coul
45、daffect whether European bailout fund could gain larger firepower soon.The market is likely to keep an eye on aboveimportant events in the short term.Chinas short-term economic data might continue to demonstrate signs of slowdown,but favorable policies helpto stabilize the economy gradually.Economic
46、 slowdown might not end yet in the short term,just as what the PMI of Augindicated,which is negative to the market.The export continues to face strong headwinds as shown in the new export,See the last page for disclaimer,page 5 of 33,order index from final HSBC China PMI that fell to 41-month low an
47、d from official PMI that stayed at the 8-month low.Good news is the policy stance aims to support the economy.The meeting of CPC Political Bureau held on July 31 set thetone for the economy in 2H12,addressing to enhance the structural tax cut,providing support for key investment projectsand enhancin
48、g pre-adjustment and fine-tuning of policies.Several stimulating policies have been introduced by localgovernment recently,with a decent total fund scale that might be allocated within the next few years.Although currentlythe policies are lack of details and source of funding is uncertain,they might
49、 help to stabilize the investment andconsumption.In late Aug,Premier Wen also addressed certain measures to ensure the export.Despite CPI growth mightsee a slight rebound in Aug due to the recent pickup of foods prices,the overall inflation level could be still relative lowgiven the continuous decli
50、ne of industrial product prices.Therefore,its still likely to introduce easing monetary policiesincluding rate cuts and RRR cuts in the near future.In sum,the favorable policies released or to be released could help tostabilize the economy gradually,despite it takes time for those polices to have ob
