Asia Investment Views 27 Oct

US stock market was largely flat, with DJIA +0.05%, S&P 500 +0.00%, and NASDAQ +0.26%, while European markets were largely down, with FTSE –0.78%, DAX –0.38%, and CAC –0.45%. Dollar Index (DXY) is flat as of now, and Japan market opens higher in early trading.

Last night, the S&P Case-Shiller Home prices index was out, with home price (3-month moving average) rose 1.7% from August, slowest increased since February, suggesting a possible slowdown (Also see my comparison between the United States and Hong Kong in 1997). On the other hand, Consumer Confidence rose more than forecast. But this is not an entirely good sign, as we also saw a few days ago that the Consumer Confidence survey by Nielsen Company showed that Consumer Confidence declined in Q3 in North America and Europe. On corporate earnings side, Kimberly-Clark (KMB.N) missed estimates, while DuPont (DD.N) and Ford (F.N) both topped estimates.

HK/China equities preview

Today headlines in Hong Kong include the Hong Kong Monetary Authority submitted a document to the Legislative Council, indicating that the home prices in the luxury residential segment have already surpassed the level in 1997 by 14%, while the mass residential segment are 10.1% below. UBS property team thinks home prices will all surpass the level of 1997, which is not very surprising given the recent performance of home prices. In fact, many recent mass residential properties transactions have surpassed the 1997 prices level, particularly in the “blue chips” big real estate located along MTR, e.g. Tai Koo Shing. It does not mean that the homes price would fall as it approaches 1997 level, which is very much overvalued, because the driver of home prices is still there, and government has done very little to change the situation.

Another headline which is totally nonsense: Lee Shau Kee, the Chairman and major shareholder of Henderson Land (12.HK), has just got three new grandsons. Curiously, his son Lee Ka Kit got this three sons with a surrogate mother. This is an non-event to Henderson Land as of now, but people will be very interested to know how the succession plan will be like for the company, as it is the 4th largest property company in Hong Kong by market capitalisation after Sun Hung Kai Properties (16.Hk), Cheung Kong (1.HK), and Hang Lung Properties (101.HK).

Bank of China (3988.HK) and Agricultural Bank of China (1288.HK) will report their Q3 earnings.

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About Zarathustra

Zarathustra: Founder and Managing Editor of Also sprach Analyst. Once an analyst, now an investor and entrepreneur. Based in Hong Kong, but Londoner at heart.