Asia Morning Analytics: 250110 Asia Morning Wrap

Morning readers,

Friday was some day for Hang Seng! But what's more interesting was the development on US on Friday, as we saw S&P falling another 2%, marking one of the sharpest drops over several weeks now. Market continues to set in a bearish tone, with stimulus withdrawl over China and Obama's amazing plan to take down excessive risks from banks.

Now Friday was a big hit on the market, with across the board sell-off. Notably, however, is that high valuation stocks in the consumer sector got hit the hardest, suggesting institutionals may be off the table for a while. I continue to issue caution over recent development, though, this may be the "double-dip" that we have been looking for over a year ago.

The market currently is heavily clouded by policies and recent economic developments, however, the data coming out has been relatively positive. Therefore, to a certain level, we may welcome such policy changes, though the downside risk remains to be the delicacy of the market remains intact.

We believe this may be the "catch-up" with the fundamentals as we saw the market rallying at an amazing speed last year. Hence, this may be a healthy pullback, and investors will jump on board as policy overhang fades out.

On this note, we continue to look at consumer plays, whilst a sector rotation may remain intact, as we look for lower beta plays during this downturn to perserve capital. Today should be a day looking for overreaction, and day trading opportunities.

ongy out.

Asia Morning Analytic: Asia 210110 Morning Wrap

Morning readers,

Must make a remark over the speed of stimulus withdrawl in China is amazing - a result of fearing inflation climbing at record highs. However, as, per earlier discussed in GFA 2010 Outlook, we do anticipate a volatile year. Given the pre-emptive moves the Chinese are doing, this may provide some strong indications that the Chinese believes the growth is becoming more sustainable, amid skyrocketing credit growth which poses risks of increasing bad loans.

On a general outlook, we may welcome such measures, but in the short term, we may anticipate increasing volatility as both fundamentals and technical buyers may see value in the market, however, the data and news stream is pointing to the downside. We continue to expect the market to end between 21300-21800 prior to CNY, but a big level to look out for is a break on 21000.

Overnight cues were taken from Asia, as China's increasing likelihood of a early withdrawl may hint a global slowdown on its recovery. Therefore, this morning, we may look for extended falls from stimulus worries. I believe upcoming reporting seasons in Asia may provide support for the market, though we may be treadding waters over the next few sessions.

However, with the dollar gaining strongly overnight, we may see further falls on commodities, though, may also pose chances to enter on such dips.

Again, we maintain our view to favour utilities and consumer stocks as oppose to the interest-rate sensitive, and high beta stocks. We also maintain a short term negative view on H-share banks, but regard this as stocking up opportunity over earnings report.

ongy out.

Asia Morning Analytics: 200110 Asia Opening

Morning all,

Overnight cues from the States bodes well, with healthcare and tech firms leading the market up 1% across the exchanges. Dollar rose, whilst treasury yields were up 2 basis point, suggesting the return of risk appetite over earnings.

Despite the dollar index moved up, commodities in general took an upward direction, with crude rebound from lows of 76s back to 78s. Gold was little changed from Asia, holding the 1130 levels real well. Such a move suggests some decoupling of the dollar correlation, and should be monitored closely.

Looking ahead for HSI today, would anticipate further recovery, looking to finish relatively strong around 21700-21800 mark, taking another 0.5% gains from yesterday.

Beaten down commodities stocks may stage for a rebound, and top pick would be sinopec (386.hk) @ 6.60, targeting 7.00 exit. Also, anticipate further recovery on various commodity stocks, such as Zijin (2899.hk) and Jiangxi Copper (358.hk) @ $18.00, targeting for $19.00.

Banks may continue a bit of a chaser run, though would not advice to chase for short term gains. However, as medium term investments, all three H-share banks looks attractive on valuation, with buys for ICBC (1398.hk) @ $6.00, CCB (939.hk) @ $ 6.20, as policy overhang fades.

Consumer names remains to be favoured, with NWDS (825.hk) @ 7.30 and Golden Eagle (3308.hk) @ 14.80, whilst Lianhua (980.hk) looks a bit overpriced and due for profit taking, However, Beijing Jinkelong (814.hk) looks good if a small retreat comes around.

Ports may be chasing on laggard, with Dalian (2880.hk) @ 3.32 and Tianjin Development (3382.hk) @ $2.60, targeting $3.00.

ongy out.

Asia 190110 Closing Wrap up

Afternoon all,

Pretty spot on today with the technical rebound with sentiment improving as late rebound took HSI up 0.9%.
Bank took a rebound in the late session, though it failed to hit our entry point at 5.80 and 6.00 for ICBC and CCB respectively. However, both took a strong up, leading the rebound, as ICBC went up 3.07% and CCB up 4.05%.

Properities also staged a late rebound, with Great Eagle, Agile and Greentown China up between 3-5%, leading HSI up finishing 0.9%.

Consumer stock also took a great start for the session, but failed to hold gains, with Golden Eagle up 1.31%, whilst NWDS down 2.52%. However, both had great intra-vol that saw more than 5% movement.

Ports significantly outperformed in the late session, with Cosco and CHMI up 4% respectively. Whilst the autos did a great job from technical buyings.

However, must note that despite commodities are up, the market traded it as non-event, with mostly taking a hit down 1%.

Looking at the late actions on the market, sentiment seems to have improved, as policy overhang seems to be done for a while. Taking leads from action, we may look at further rebound on HSI for the coming few days.

ongy out.

Asia Morning Analytics: 190110 Asia Open

Morning,

Given US closed with Martin Luther King Holiday, lead will not be as strong, as Asia will take some cues over the developments from Europe. We may also takes some cue from the currency market, which shows a slight decline on the dollar against a broadbase of currencies.

Highlighting key development includes:

1. Europe gained over M&A buys with Cadbury up 1.3% and International Power Plc up 5.1%.
2. Crude and commodities poised for a small rebound, with UK's house index posing a stronger number and Pounds gained over risk appetite.
3. However, PIGS sovereign credit problems remains unresolved, and continue to be on the spotlight, posing downside risks on the market in the longer term.

On the Asia side of development,  NDRC's approval over continual support on strategic emerging industries seems to provide further guidelines over what the government wants to pursue over the near term.  Whilst according to PBOC, Shanghai's personal consumption loan has reached 481.39 billion, reaching a historical high.

In terms of day view ahead for HSI, would continue to see some technical buying support, despite ending with negative sentiments from previous session. May look into a further technical buying from the commodities sector from the crude recovery, whilst bank may continue to it's technical buying on valuation. ICBC (1398.hk) and CCB (939.hk) poised to continue its technical buying on dips. Look for purchase at around 5.80 and 6.00 respectively.

We remain to believe that consumer name plays for a CNY sales will continue its run. We like names such as lianhua (980.hk), NWDS (825.hk) at 7.38 , Golden Eagle (3308.hk) at 14.90. We also like Gome (493.hk), looking for a breakout play above 3.00, whilst Haier (1169.hk) at 4.40 as these industries remain to be supportive for CNY, looking for 15-20% upside.

We may look for a HSI rebound today, recovering lost grounds from yesterday, aiming for a 0.5% - 1% rebound, targeting the HSI range between 21500-21800.

ongy out.

180110 Asia Close Wrap up

Afternoon all,

HSI saw a technical rebound in the morning, with overall market being punted upwards, close to flat. Chinese Banks took the lead, with ICBC and CCB both up 2%.  A broad market recovery came in the morning, with steel, oil and auto saw a rebound upwards. Properties also led the rebound, with Agile outperforming by 3.60%.

However, afternoon sentiment changed, as the market took its way back down, closing down 0.9%. CNOOC (883.hk) and Sinopec (386.HK) ended down 1.95% and 0.61% respectively, whilst steel were mixed, with magang (323.hk) closing flat up, whilst angang (347.hk) down 2.73%. Autos took a technical rebound, with Dongfeng (489.hk) up 2.24%, and brilliance (1114.hk) up 2.38%, however, Geely (175.hk) down 1%.

Moreover, consumer names were mixed, with mengniu (2319.hk) and ausnutria (1717.hk) down 1.46% and 1.47% respectively  , and paper segment is heavily shorted, with ND Paper (2689.hk) down 4.13% and Lee & Man Paper (2314.hk) down 5.12%. Textiles were also down on negative US consumer sentiment, with Esprit (330.hk) down 2.75%, and Giordano (709.hk) down 3.15%.

Power sector didnt perform well as we expected, with a broad base decline of 0.5 - 1%. However,
our prediction on sector rotation came through for particular segments of the calls, with China Water Affairs Group (855.HK) and Beijing Enterprise Waters Group (371.HK) taking the lead, up 6.06% and 5.51% respectively. Intra-day volatility on the consumer names also took off, with Foxconn (2038.hk) had an intra-day volatility of 10%, but ending down 0.18%, whilst golden eagle (3308.hk) took off intraday volatility with 5%, ending up 0.26%. Lianhua (980.hk) had a run, ending up 5.20%.

From the way it closed, we may see that sentiment remains negative, and warns for caution over near term downside movement for HSI. We may lower our weekly range towards CNY to 21000 - 21500. We remain to consider consumer names and utilities, though today's bank bargain hunting may provide signs that policy overhang may be close to finishing its run.

ongy out.

Asia Morning Analytics: 180110 Asia Opening

Morning,

Running a bit late this morning, so a quick recap over friday's move. Clearly leads don't bode well for Asia, with JP discussing problems with their bad loan issues, whilst commodities generally took a hit from general sentiment. Risk aversion returned on friday, with the S&P 500 lowered more than 1%.

Looking ahead, we believes there are increasing volatility to the market, given the amount of negative pipeline of data, whilst authorities looking to contain stimulus. Though, one may look on the bright side that given the amount of measures in place already, the pace of stimulus withdrawl may slow down.

We remain to believe that HSI shall be trading narrowly, looking to consolidate within the range of 21800-22300. We may expect HSI to lower less than our US counterpart today, within 0.5% range due to continual technical buyings on support after a weekly down last 5 sessions.

Again, sector rotation is our main theme. We may look into consumer names, utilities, and telcos.

Asia Morning Analytics: 150110 Asia Morning Wrap

Morning all,

A bit of a delay today with our views, but with Intel's earnings beating cosensus, we saw overnight market to be up a notch. However, note must be taken to the fact that retail sales data slowed and initial jobless claim was hitting walls to point to the fact that the recovery over in US might be slowing. Thus, this may provide more room for the rates to remain low in the states, whilst dollar to resume its fall.

Taking cues from overseas market, we may anticipate today to have a overall flat day. Again, sector rotation will be the main theme, with utilities and consumer staples to outperform the market. We may also see the commodities stabilising after sharp falls the past two session, with technical buyings coming in.

Again, we reiterate banking and properties sector remain to be uncertain with government actions pounding the sector hard. We remain to be seller in the short term, and looking for dips on consumers and utilities.

Despite ports been the star since the year started, we may see some profit-taking after the poor US data which may hint export recovery may not be as rapid as one would think.

We may also look at buying commodities on the dip because of a dollar correlation hedge buying, and the fact that inflation issues are beginning to float across the globe.

Would also like to point out a further note should be examined over the Greek issues, as sovereign credit rating is, again, on its hind legs, which may result in echo credit collapses.

ongy out.

Asia Morning Analytics: 140110 Asia Morning Wrap

Morning all,

Overnight bodes well with earnings beating estimates for several companies, with S&P 500 ending +0.83%, Nasdaq up +1.12%. Crude tanked over report showing inventory increase, whilst gold recovered some loss, ending back at 1138. Dollar showed signs of weakness, as UK hints to raise rates before the Feds.

Interesting to note overnight, S&P lowered California debt raing to A-, again, revealing our earlier predictions over sovereign credit problems. With now the globe funding its stimulus on building on more debt, especially for the US, sovereign credit, therefore, clearly presents problems. If this situation worsens, especially in the US, we may see a new round of the dollar crashing due to sovereign problems, and less severely, because fed hiking rates may be out of the question for a while. Such play turns out true, commodities, again, will be in the lights for hedge buys. However, as noted from GFA outlook 2010 part 2, China's suprise stimulus exit may become a great risk for such a commodity story.

As for the Asia side, we may see some broad base recovery today from yesterday's over reacted move, however, would maintain to be a seller on banks, insurance and property plays due to overhang of policy measures in the near term. We also see sector rotation coming into play from our seller list into interest rate non-sensitive sectors, namely, the defensives such as utility, consumer staples and the gambling stocks. Would also anticipate HSI to trade range bound until CNY between 22000 - 22300.

GFA maintains to be a buyer of consumer names on dips.

ongy out.

GFA: 2010 Outlook Part 2

Hi all,

A bit late for a morning wrap, so going to post some comments over 13 Jan's mid day moves.

HSI down 2.3% in midday, with commodities, properties and china banks most hard hit, though we see a broadbase fall on the market. Overnight, we had poor results from Alcoa whilst Chinese authorities accelerates the stimulus exits b raising the RRR by 50 bps, after guiding the weekly bill rate up 40 bps. Such a move was unexpected, and leads to our part 1 of the analysis that policy risks are kicking into 2010 to create a volatile year.

Despite all these, one must note that Chinese economy may seem to have started picking up strongly the recovery trend to a sustainable level, after seeing import and export surging early last week. This points to the export-led recovery might be on the way, whilst internal consumption will, again, remain to be the focus theme for the rest of the year.

One, however, must note that the unexpected stimulus exit from Chinese side may post query to the recovery ahead of us. The main question being - DID THEY DO IT TOO EARLY?, especially they are the leading engine of digging the globe out of recession after GFC.

With a pipeline of bad data and unexpected moves, we may anticipate near term volatility to escalate, whilst sentiment will certainly be hurt. Would be a buyer on dips on inflation-beneficial stocks, such as consumer stocks, gold and oil.

happy trading.

ongy out.

GFA: 2010 Outlook Part 1

Hi all,

Apologize over lack of updates recently, and also, would like to take this opportunity to wish our readers a happy new year and a prosperous 2010!

GFA decided to use this opportunity to provide our view of 2010, and discuss over thematic plays in 2010.

Our core theme remains to be driven by the "Asia Pacific-led" growth for 2010, though we believe that a rebalancing of portfolio will be increasely likely, especially if US and EU unexpectedly raises rates and outlook in mid-2010, ahead of what many expects, which may trigger the liquidity-driven growth in Asia Pacific to recede. Moreover, there are increasing risks for stimulus-exits which could trigger another volatile year for 2010. We see a reverse V from mid 2010, which could trigger what we have previously been mentioning: a sharp correction to catch up with economic fundamentals. Lastly, sovereign risk becomes a significant risk provided that the recently turmoil in Dubai and Greece may trigger sovereign debt crisis, especially with blowing public debts across the globe.

Having said that, we believe stimulus efforts to remain supportive for growth because infrastructure-led stimulus will be more effectively implemented in 2010 across the globe, which many also eases, temporarily, the high unemployment problem across the globe. This spells that the metal spaces will be one of the main contributor to the indices for 2010. However, one should continue to monitor for excess capacity, especially in China metal mills names.

This may also translate to upper-end demand for iron ore and coking coal producers, and hence, we are bullish over iron ore producers in ASX. We like names such as Fortescue (FMG.AX), Centennial Coal (CEY.AX), Gloucester Goal (GCL.AX), as we expect the next round of iron ore talk to increase prices by 10-15%.

Our second theme remains to follow the stimulus beneficiaries, especially in China. We like the Chinese efforts to expand internal demand through various initiatives from the government. Hence, we remain to be a buyer of consumer space in China and HK. We remain to like names such as Haier (1669.HK), and Gome (493.HK) due to the electronic tax incentives and higher end price caps approved by the government. We are also a buyer of end-stream consumers, such as department stores and supermarket chains.

This ends our part 1 of our analysis.

Happy trading!

ongy out.