Hong Kong Stock Market Wrap Aug 12th, 2009

HSI 20,435 -3.03% : HSCEI 11,656 -2.77% : Turnover HK$75.1 billion

Hong Kong market fell the most in three months, due to the sell off by mainland market. The Commerce Ministry in Beijing comments on China's efforts to boost domestic demand cannot completely offset slumping exports. The HSI finished down 638.97 points, falling off a 12-month closing high above 21,000 points on the previous day. Market feels that the index supported should be around 20,000 points in the short term, close to its 20-day moving average. Turnover rose sharply to HK$75.1 billion from Tuesday's HK$65.7 billion. HSBC (0005) and China Mobile (0941), which have both surged in recent sessions on mounting speculation of an impending A shares listing.

Property: Agile Property (3383 HK) has agreed to pay 360 million yuan for four commercial and residential sites in Shenbei district in Shenyang. The sites have a total area of 342,500 square metres and a gross floor area of 702,800 sq metres. The accommodation value of the sites is 512 yuan per sq metre. Swire Pacific (19 HK), a general trading house with interests in aviation, property and shipping, is selling US$500 million worth of 10-year dollar bonds. Initial price guidance has been indicated at 190 basis points over US treasuries for the transaction. The deal is being handled by HSBC and JPMorgan. Standard & Poor’s has rated it A-minus, while Moody’s has an A3 rating. The outlook is stable for both ratings.

Banks: HSBC (5 HK) has completed a mandatory tender offer for the remaining 10.11 per cent of the shares of PT Bank Ekonomi Raharja Tbk (Bank Ekonomi) held by the general public. The bank has bought about 269 million shares of Bank Ekonomi, a provider of commercial banking services in Indonesia, for IDR713.4 billion (US$71.6 million). This brings HSBC’s holding in the Indonesian bank to 98.96 per cent. HSBC was required to make a mandatory tender offer to public shareholders after it acquired 88.89 per cent of Bank Ekonomi on May 22. China Construction Bank (939 HK), the nation’s third-biggest bank, has agreed to buy out the consumer finance business of American International Group in Hong Kong. CCB Asia, a subsidiary of CCB, will buy 100 per cent of the shares of AIG Finance (Hong Kong), a wholly-owned subsidiary of AIG, for US$70 million in cash, plus the repayment of AIG intra-group indebtedness and deposit obligations of around US$557 million. Dah Sing Financial (440 HK) yesterday reported a 20 per cent decline in first-half net profit to HK$300 million, while Dah Sing Banking Group (2356) reported a 40.6 per cent drop in net profit to HK$307 million.

Auto: Great Wall Motor (2333HK) plans to sell 170,000 to 190,000 vehicles this year, according to deputy general manager Bai Xuefei. Meanwhile, rumour has it that the Hebei-based vehicle maker is mulling an A-share listing. Yet, Bai said the company saw no fund-raising need and did not have substantial details for the listing plan at the moment

Hong Kong Exchanges and Clearing (388 HK) earns HK$2.2 billion in the first half, a 26 per cent drop from last year. Second-quarter net profit rose 63.8 per cent to HK$1.37 billion from HK$834 million in the first three months of the year. The bourse operator will pay an interim dividend of HK$1.84 per share, 26 per cent lower than the HK$2.49 a year earlier. However, the payout ratio was kept at 90 per cent.

Telecom: Hutchison Telecom Intl (2332) has agreed to sell its controlling stake in Israeli mobile operator Partner Communications to local entrepreneur Scailex Corp, an importer of Samsung mobile phones, for US$1.38 billion (HK$10.76 billion). HTIL expects to book a pre-tax gain of US$1 billion on the 51 per cent stake sale. The deal might be completed in two to three months, it said. Scailex agreed to buy the Partner stake for 67.025 Israeli shekels (HK$135.28) a share, equal to Partner’s closing price of 67 shekels on Tuesday. Hutchison Telecommunications Hong Kong (215 HK) recorded a net profit of HK$256 million for the first half, up 3.6 per cent compared with a year ago. Earning per share were 5.32 HK cents. An interim dividend of 1.12 HK cent per share was declared.

Casino: Melco Crown (200 HK), a 34.1 per cent-owned associate of Melco International Development, plans to issue 37.5 million American depositary shares to raise as much as US$190 million (HK$1.48 billion). Each ADS will represent three ordinary shares, and will include option to issue an additional 3.75 million ADS in the event of strong demand from the investment community. The deal could raise up to US$220 million to help Melco repay debt.

Insure: Ping An Insurance (2318 HK), China’s second-largest insurer, will invest HK$23.25 million for a 50 per cent stake in a joint venture set up with a subsidiary of asset management company Value Partners Group. The company plans to launch exchange-traded fund (ETF) products in Hong Kong. The deal is subject to regulatory approval.

Shanghai Industrial (363 HK) Holdings has agreed to acquire from its parent two residential sites located in Qingpu district in Shanghai for 1.53 billion yuan. The sites have a total area of 950,000 square metres. The accommodation value of the sites is 1,500 yuan per sq metre.

Tencent Holdings (700 HK) an internet and telecom services provider, said first-half net profit jumped 89 per cent year-on-year to 2.26 billion yuan, boosted by strong second-quarter revenue growth for its paid internet services. The company’s second-quarter net profit was 1.2 billion yuan, leaping 85.2 per cent from a year earlier. No interim dividend was proposed.

Consumer: Wumart Stores (8277 HK), Beijing’s largest supermarket chain, yesterday announced that it would cumulatively raise about HK$1.65 billion from strategic investors, including a TPG-managed fund, for opening new stores and making acquisitions. TPG Asia V LP would buy HK$930 million of Wumart’s Hong Kong-listed stock, and a unit of Chinese private equity firm Hony Capital LP would buy HK$170 million of shares, the company said. These strategic investors’ shares would account for 10.9 per cent of the company’s total shareholding equity. Natural Beauty (157HK) said net profit for the six months ended June was HK$108.9 million, down 27 per cent from a year earlier. Revenue fell 19 per cent year-on-year to HK$255.3 million. Earnings per share were 5.446 HK cents. The company proposed an interim dividend of 3.5 HK cents per share.

Sources: Sing Tao Finance, Hong Kong Economic Journal, Hong Kong Economic Times