Daily market outlook commentary - 7 March 2014
As expected, plenty of hot monies flew into water, shale gas, wind and solar stocks yesterday after Premier Li’s work report but in fact, it is by no means comparable to the craziness on the new pets of Alibaba and Tencent (700), i.e. Citic 21 CN (241) and China SouthCity (1668), which was the fourth and fifth highest traded stock yesterday in terms of turnover, which both exceeded HKD 1.2 billion. Not seeing any related newsflow and Citic 21 CN actually issued an unusual share price and volume movement clarification announcement after market close, saying that they are not aware of any reason on such movements. Must say that it’s hard to tip the peak on conceptual runs but experience tells that spill over is highly likely. For Alibaba related stocks (either on stake holdings or business co-operation), can look at China Dongxiang (3818), Sinosoft Tech (1297), Kingdee (268), Haier (1169) and Lung Cheong (348). For Tencent related stocks, Kingsoft (3888) and even Carrianna (126, which holds over 130m shares of China SouthCity) can be of focus. Checking latest share price trends, Lung Cheong and Carrianna probably worth chasing but liquidity is the issue on both. Looking at what happened on tech names in the States overnight, the potato should remain hot today. Meanwhile, seeing some nice rebound in mainland property developers yesterday, more a case of bargain hunting. Logistic companies also ran, a laggard probably Kerry Logistics (636). Weakness in Macau names (profit taking?), pharmaceutical stocks (fading hope after the work report as nothing was mentioned in the area) and mainland financials (bond default overhang/competition from internet related companies) were obvious. Another interesting story is about LED lighting, where an interview with KS Li revealed that the tycoon is favoring some new technology in the area, and that explain the big run in names like NVC Lighting (2222), TC Ori Light (515) and etc. In terms of laggard, can take a look at Neo neon (1868). Company is still in progress of finalizing the subscription agreement, where under the Letter of Intent, 1 billion new shares (approximately 51.6% of the enlarged issued share capital) will be issued at HKD0.9 each. This perhaps capping the rally of the stock to a certain extent but can certainly fly afterwards.
Last Update: 2014-03-07