In today’s briefing:
- ASMP (522.HK): Hang Seng Tech Index (HSTECH INDEX) Took Out ASMP with NIO Inc (9866 HK).
- Last Major Currency Peg: Hong Kong’s Fate Could Be Determined by the Fed and Geopolitics
- WuXi AppTec (603259.CH/2359.HK)- The Private Placement and Shanghai Yingyi’s Illegal Share Reduction
- Orient Overseas Intl (316 HK): Cursed by Index Inclusion?
ASMP (522.HK): Hang Seng Tech Index (HSTECH INDEX) Took Out ASMP with NIO Inc (9866 HK).
- On May 20, Hang Seng Tech Index (HSTECH INDEX) took out ASMP (522.HK) and replaced by NIO Inc (9866 HK).
- Apparently, the EV has a better future outlook, and NIO is riding on the right wind even it’s still lost making.
- Meanwhile, we think ASMP’s should see another hike in 3Q22, and its revenue was forecasted between US$670 million and US$740 million in 2Q22.
Last Major Currency Peg: Hong Kong’s Fate Could Be Determined by the Fed and Geopolitics
- Prior to 1983, Hong Kong experienced economic overheating and high inflation. The currency peg’s inception coincided with the rising anti-inflationary credibility of Fed policy conduct.
- Hong Kong is, however, now totally exposed to any draconian attempts by the Fed to recoup lost credibility via tighter policy settings.
- China needs its own sovereign-controlled financial hub. Hong Kong could be China’s financial centre, but recent currency weaponisation implies tenability of the currency board becomes increasingly driven by geopolitics.
WuXi AppTec (603259.CH/2359.HK)- The Private Placement and Shanghai Yingyi’s Illegal Share Reduction
- It’s understandable to take advantage of current market value and reserve capital in advance.Considering potential risks, how low the price of proposed issuance has to be to feel “safe enough”?
- Yingyi’s illegally reducing its holdings of WuXi AppTec could be a signal– Yingyi and other shareholders/executives are not confident in WuXi AppTec’s outlook, who may not regain its glory days.
- We recommend investors to view this proposed issuance rationally. If investors want to trade, a good strategy is to catch rebound after plunge, although the temporary rebound does not last.
Orient Overseas Intl (316 HK): Cursed by Index Inclusion?
- While Orient Overseas International (316 HK) will welcome its inclusion in Hang Seng Index, there is risk that it will follow the pattern that new inclusions performed badly post entry.
- Globally, many container shipping stocks have retreated from their peaks in Mar this year, but OOIL is still hovering around its peak level, making is susceptible to a correction.
- Challenging factors include softening sequential momentum, peaking out of spot rates, weaker demand picture, increase in supply pressure and declining earnings trend are weighing on the industry and the company.
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