[ET Net News Agency, 16 January 2025] In December, the core CPI year-on-year growth rate
in the U.S. unexpectedly fell to 3.2%, with a slower month-on-month increase of 0.2% below
expectations, supporting market expectations of a rate cut by the Federal Reserve.
Following gains in U.S. stocks, Hong Kong stocks surged, opening over a hundred points
higher. The increase widened to 378 points, reaching 19,664 points, but faced resistance
at the 20-day moving average (around 19,607) and the 100-day moving average (around
19,576), causing the Hang Seng Index's gains to retract. At midday, it was reported at
19,445, up 159 points or 0.8%, reclaiming the 10-day moving average (around 19,330), with
a turnover of over 82.9 billion.
The Hang Seng China Enterprises Index rose by 49 points or 0.7% to 7,061, while the Hang
Seng Tech Index increased by 37 points or 0.9% to 4,401.
"Yuen Che Hay: Hang Seng Index needs to stabilize above the 10-day moving average to
potentially stop the decline and rebound"
With U.S. inflation showing signs of cooling, the major U.S. stock indices performed
well. Yuen Che Hay, the Co-Director of Investment Strategy of Quam Asset Securities, told
ET Net News Agency that the current market sentiment is largely influenced by the movement
of the RMB. The U.S. dollar and bond yields have shown a relatively minor response to U.S.
inflation data, with the dollar still around USD 109 and bond yields at high levels.
Company performance and the upcoming Two Sessions policies will also impact Hong Kong
stocks. From a technical perspective, Yuen Che Hay believes that in the short term, the
Hang Seng Index must stabilize above the 10-day moving average to potentially stop the
decline and rebound. He is observing whether the Hang Seng Index can close with a bullish
candle today, as there is significant resistance at 19,800 points, with multiple moving
average lines at this level.
"The focus of CTF Services issuing bonds is likely to try to dilute its stake in the Chow
Group"
CTF Services (00659), a subsidiary of New World, announced the issuance of HKD 780
million in half-year convertible bonds with an annual interest rate of 4.00%, effective
from 22 January this year, and maturing on 22 July of the same year.
Based on the initial conversion price of HKD 8.043 per share and assuming full
conversion at the initial price, the bonds could potentially convert into approximately
96.97 million new shares, accounting for around 2.426% of the company's existing issued
share capital and about 2.369% after the issuance of new shares. The conversion price of
HKD 8.043 represents a premium of about 5% over the previous closing price.
Yuen Che Hay believes that CTF Services' banking business involves significant amounts,
suggesting that the company may not actually need HKD700 million in funding. The
noteworthy aspect is that CTF Services is issuing convertible bonds with a short half-year
term. Currently, the Chow Group holds a high stake of 75.61%. Yuen Che Hay does not rule
out that the focus of this operation by the company is the subsequent conversion part,
aimed at diluting the Chow Group's stake.
CTF Services mentioned that the proceeds from the bond issuance may be used to repay a
portion of the group's bonds and loan principal and interest. New World (00017) saw an
early increase. Are the two related? Yuen Che Hay stated that the possibility exists that
the bond issuance is to supplement New World's liquidity. However, if CTF Services becomes
a new shareholder, the situation would become more complex. The amount raised by CTF
Services is minimal concerning New World's debt problems. If CTF Services intends to help
New World, the possibility of receiving the other party's asset package in cash is higher.
In addition, New World's residential portion of the North Point Emperor Cinema
redevelopment project, "STATE PAVILIA", successfully sold five luxury residences within
five days, raising over HKD 200 million in total. The average price per square foot was
about HKD 34,000, setting a new record for luxury residential prices on Hong Kong Island
in 2025 and marking the first single-day sale of a new luxury residential property this
year. Yuen Che Hay noted that the strong sales performance of New World's Emperor
residences is due to their unique location. However, given the high-end positioning of the
development, it is currently in a trial phase, and it is uncertain whether the sales
momentum will continue to improve.
"Further observations needed for the potential of NetEase games"
Recently, NetEase (09999) has shown strong performance with its new game releases.
Besides the collaboration with Marvel on "Marvel Rivals", which achieved several global
firsts since its global launch on the 6th of last month, the mobile version of "Where
Winds Meet" also became popular, reaching the top spot on tap tap shortly after its
release. The previous night, NetEase ADR surged over 8%, with Hong Kong stocks also rising
for the ninth consecutive day.
Yuen Che Hay mentioned that "Marvel Rivals" has performed excellently in terms of
revenue and rankings, and "Where Winds Meet" has shown good download numbers. These have
led to strong stock price performance in the short term. However, to determine the
potential of these two games, it is necessary to observe whether they can maintain good
performance over the next two to three weeks. Currently, the stock price is at a
resistance level (around HKD 162), indicating the peak of the uptrend in May and October
last year. For investors without positions, he warned that the appearance of a cracked
candle suggests caution in immediate buying.