This week started on a distressful note. The Hang Seng Index plunged 500 points this morning tracking overnight weakness from US and Europe, latest BREXIT poll result and domestic terrorism tragedy in Orlando. This morning the GBP weakened further and JPY strengthened 70bps which dampened investors’ confidence. OTAS has been flagging names that are under pressure with risks of further downside.
Hong Kong Main
List of stocks flagging negative warnings.
Bank of East Asia (23 HK)
Insiders have sold total of $7.4mm in the past month. Valuation remains high and dividend trend is expected to decline as well. Its Price/Book valuation of 0.9x is very high relative to the valuations, whereas the 12 months forward yield of 2.9% is very low relative to its banking sector. According to TIM Indicator, sentiment on this stock is generally negative.
Hong Kong Exchanges and Clearing (388 HK)
Implied volatility dropped significantly compare with ASX. Generally speaking, implied volatility decreases when investors believe that the stock price will rise over time. Perhaps an indication from the market on hope of Hong Kong and Shen Zhen connect to happen soon?
Nevertheless, the stock remains to be very expensive – the 12 months forward P/E valuation of 33x is high relative to the past two years.
China Mobile (941 HK)
Price to book is shown to be the highest among the three giant telecom names in China.
Within its telecom sector, China Mobile’s 12 months forward EV/EBITA valuation of 4.9x is on a very high level relative to the past two years.