Asian Market Review - September 8th 2010

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Hong Kong Review – Li Ka-shing’s Duo Led HK’s Advances

Hang Seng Index went up 127.08 points to 21,678.80, as Hutchison and Cheung Kong beat the cautious sentiment over the nonfarm payrolls report. The duo contributed about 50% of Hang Seng’s gains after both showed strong 1H10 earnings.

Hutchison Whampoa said that its 1H net profit to have increased to HK$6.45 billion, higher than market’s expectations of HK$4.51 billion. Its 3G business which was doubted earlier, made a positive contribution. HW’s shares leapt 9.7% to HK$58.20. CLSA raised HW’s target to HK$64 from HK$60.

Cheung Kong Holdings, Li Ka-shing’s property flagship which is HW’s largest shareholder, also went up 3.9% to HK$100.4 after announcing a 4% increase in 1H profit of HK$11.92 billion. HW’s performance and its property sales were the major contributors to the positive results. Goldman Sachs upped CK’s target to HK$110 from HK$107.

In the property sector, Sun Hung Kai Properties would sell 81 homes at Larvotto at HK$13,478 per square foot on average as soon as Wednesday. At the Ap Lei Chau project, four Tower 2 units are priced at HK$17,236 to HK$21,055 psf. Since July, more than 500 homes at Larvotto had been sold for a total of HK$12.5 billion, and SHKP is seen to keep hiking prices at Larvotto.

Other winner on Friday was The Bank of East Asia which settled at 2.78% higher at HK$31.45.

On the ratings front, Swire Pacific was raised to HK$100.40 vs. HK$90.00 by Citi, while Deutsche Bank raised SP to HK$103 from HK$98. JP Morgan set target at HK$115.80 vs. earlier HK$98.41 with Overweight rating vs. the previous Neutral. BofA-ML upped SP to Neutral from Underperform and saw target raised to HK$102 from HK$91. Only Morgan Stanley downgraded the rating ti Equal-Weight from Overweight. Cathay Pacific was raised by Deutsche Bank to be at HK$23.20 vs. prior HK$19.60.

Hong Kong Review – Cathay Pacific Led Gainers after Earnings Jumped

Cathay Pacific’s stock soared to HK$ 18.08 after the company announced that net profit for 1H10 jumped to HK$36.84 or an eight-fold leap. The rise was attributed to two asset sales and recovery in passenger and cargo demand. Recently, Cathay’s target was raised to HK$19.61 from HK$18.02 by Daiwa. Swire Pacific, which holds control over Cathay Pacific, went up 1.4% to HK$ 98.05. Swire itself will announce 1H10 results on strong results.

Hang Seng index gained 92.22 points or 0.43% to settle at 21,549.88. Other notable gainers were Hang Lung Properties and China Mobile. Hang Lung Properties went up as property sector is expected to gain later on rosy outlook on Swire Pacific’s earnings which are due this Thursday.

Meanwhile, HSBC was upgraded to OUTPERFORM from UNDERPERFORM at CLSA. Its target also raised by Morgan Stanley to HK$90 from HK$87. Earlier, RBS cut HSBC to HOLD from BUY. BOC Hong Kong’s target was raised from HK$19.31 to HK$21.25 by CPY but its rating was downgraded to HOLD vs. BUY.