[True Wisdom Hong Kong Stock Experts] US stocks under pressure, Hong Kong futures fall on settlement day, NWS Holdings announces annual results with increased net profit and higher dividends

Hong Kong Stock Market Trends and Analysis

U.S. stocks fluctuated under pressure on Wednesday. Supported by tech earnings early in the session, the market opened higher but gradually retreated, with all three major indices closing with modest losses. The U.S. dollar weakened, while the 10-year Treasury yield rose to 4.3%. Gold prices continued to hit record highs, and oil prices rebounded slightly from lows. Hong Kong ADRs showed mixed performance, suggesting a directionless open for the local market. Mainland stocks fell yesterday, with the Shanghai Composite opening higher but closing down 0.6%, while trading volume shrank slightly. Hong Kong stocks declined on futures settlement day, with the index falling below the 10-day moving average to around 20,200 points before paring losses slightly by the close. Trading remained thin. Disappointing Q3 earnings from Chinese stocks and market caution ahead of the U.S. election and mainland policy updates suggest the index will likely struggle to break out in the near term, remaining range-bound between 20,000 and 21,000 points.

Sector News

NWS Holdings (0659) recently reported full-year results, with total revenue at HKD 26.42 billion, down 2.6% YoY. Attributable net profit rose 44% YoY to HKD 2.084 billion. Operating profit attributable to shareholders increased 21% YoY to HKD 4.16 billion. Strong recurring cash flow from operations drove adjusted EBITDA up 24% YoY to HKD 7.24 billion. As of end-June, the group's total available liquidity stood at approximately HKD 26.8 billion, including cash and bank balances of ~HKD 14.8 billion and committed undrawn bank facilities of ~HKD 12 billion. Active financial management helped mitigate high interest rates and RMB depreciation pressures. The group strategically increased RMB-denominated debt to 60% of total debt to naturally hedge its RMB assets, with average borrowing costs controlled at 4.7% p.a. Maintaining a sustainable and progressive dividend policy, the company declared a final dividend of HKD 0.35 per share (+13% YoY), bringing the full-year dividend to HKD 0.65 per share (+7% YoY) including the interim dividend of HKD 0.30, signaling confidence in future prospects.

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

Investment Director, Glory Sky Financial Management - Kwok Ka Yiu, CFA