[True Insight HK Stocks Expert] HK Stock Analysis and Market Outlook: Caution Dominates Short-Term Trends

Hong Kong Stock Market Trends and Analysis

U.S. stocks were mixed on Monday as the market awaited corporate earnings reports. The Dow Jones Industrial Average retreated from its highs, while tech stocks performed well, with the Nasdaq Composite rising against the trend. The three major indices closed with mixed results. The U.S. dollar strengthened, and the 10-year Treasury yield rose to 4.19%. Gold prices initially rose before retreating, while oil prices consolidated at low levels. Hong Kong's pre-market ADRs were mixed, suggesting a lack of direction in the early session. Mainland stocks rose yesterday, with the Shanghai Composite Index fluctuating higher and closing up 0.2%. Trading volume in the Shanghai and Shenzhen markets increased further. Hong Kong stocks saw a pullback, with the index fluctuating lower, unaffected by the People's Bank of China's interest rate cut. Overall trading volume also declined. Investors are awaiting more policy news, adopting a cautious approach, and the index is expected to hover between 20,000 and 21,200 points.

Industry News

Sunac China (01918.HK) placed up to 489 million shares via a top-up placement, accounting for 5.31% of the enlarged share capital. The placement price was HKD 2.465 per share, a 19.97% discount to the pre-announcement price of HKD 3.08, raising HKD 1.205 billion (net proceeds of HKD 1.192 billion). The funds will mainly support the long-term resolution of domestic corporate bonds and general working capital. The board believes the placement and subscription will help mitigate the group's domestic public market debt risks, which in turn will facilitate the completion of housing delivery and operational recovery. After the placement, the stake held by Sunac International Investment, controlled by the family trust of Chairman and Executive Director Sun Hongbin, and its concert parties decreased from 29.16% to 27.61%. As many private property developers remain mired in debt crises with no improvement in cash flow, significant rebounds in stock prices provide strong incentives for fundraising. More share placements may follow, affecting sentiment in the property sector and making rapid stock price gains unlikely.

(The author is an SFC-licensed professional. Neither the author nor related parties hold the aforementioned stocks.)

Investment Director, Convoy Asset Management, CFA Kwok Ka Yiu

Date: Tuesday, October 22, 2024