Could the HK Exchange offer a good rebound from the Chinese meltdown?

Could the HK Exchange offer a good rebound from the Chinese meltdown?

Click here to receive new analysis by email

HK Exchanges and Clearing

HK Exchanges and Clearing was pretty much the ‘poster boy’ for the meteoric rise of the Chinese equity bubble. Now, with its equally ungracious collapse of more than 30% this past month, could they be worth a second look? Action on its stock went on a tear earlier this year as earnings were expected to grow significantly for this key beneficiary of the Shanghai-HK stock connect. Daily volumes on the HK Stock exchange have more than doubled from similar periods earlier this year, with HK Exchange and Clearing’s earnings expected to explode on the upside. HKEX will announce numbers next Wednesday. The stock at these levels, while not cheap, has come significantly off the lofty earlier valuations. Forward PER for HKEX stands at 28X, down from almost 40X PER (forward) earlier, before the Chinese stock markets plunged. With the prospect of increased activity as Chinese capital markets continue with their liberalisation drive - albeit at a more gradual pace after the recent meltdown there - HKEX may be worth looking at again, especially around the earnings release next week.


The US SPX has once more managed to defend its 200 Day MA last night, bouncing off the 2072 level as stocks there reversed a five-day slide. With several key data due out over the next 48 hours, a fresh attack and break below this crucial support line could bring out stops that may initiate a ‘fast-move’ breakdown. With the focus around tonight’s FOMC announcement, together with tomorrow’s US Q2 GDP release, any pleasant surprises with regards to the recovering American economy may ironically bring forth a ‘risk-off’ momentum for the equity markets there, now in its seventh year of a bull run. Counter to this though, should the numbers offer a tepid assessment of the US domestic economic scene, we may see stocks test the strong upside resistance of 2120 and 2140 once more.
IMPORTANT NOTE AND DISCLAIMERS Market Opinions Any opinion(s), news, research, analyses, prices, or other information contained on this website / document is provided as general market commentary and are from publicly available resources or otherwise obtained, and does not constitute investment advice nor does it seek to market, endorse, recommend or promote any investment or financial product. CMC Markets Singapore Pte Ltd. (Reg No./UEN: 200605050E) (“CMC Markets”) will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Accuracy of Information The content is subject to change at any time without notice, and is provided for the sole purpose of assisting traders to make independent investment decisions. CMC Markets has taken reasonable measures to ensure the accuracy of the information, however, does not guarantee its accuracy, and will not accept liability for any loss or damage. CMC offers no financial advisory services in any of the content or vouch for the veracity of any information. Distribution The content of this publication is not intended for distribution, or use by, any person in any country where such distribution or use would be contrary to local law or regulation. None of the services or products referred to or mentioned are available to persons residing in any country where the provision of such services or investments would be contrary to local law or regulation. It is the responsibility of the reader to ascertain the terms of and comply with any local law or regulation to which they are subject. Third Parties CMC Markets may provide you with opportunities to link to, or otherwise use, sites and services offered through or by third-party(ies). Your use of these third-party services is subject to such terms as posted by these third-party(ies). We have no control over any third-party site or service and we are not responsible for any changes to any third-party service or for the contents thereof, including, without limitation, any links that may be contained in or accessible through such third-party service. These links are provided solely as a convenience to you. You will need to make your own independent judgment regarding your interaction with these third-party sites or services. Our inclusion of advertisements for, or links to, a third-party site or service does not constitute an endorsement of any of the representations, products or services listed therein. Important Note Each reader/recipient agrees and acknowledges that: (a) no express undertaking is given and none can be implied as to the accuracy or completeness of this document; (b) this document does not constitute in any way a solicitation nor incentive to sell or buy any Shares, Stock Options and Contracts For Difference (CFDs) and similar and assimilated products; (c) each reader/recipient of this document acknowledges and agrees to the fact that, by its very nature, any investment in Shares, Stock Options, CFDs and similar and assimilated products is characterised by a certain degree of uncertainty; that consequently, any investment of this nature involves risks for which the reader/recipient is solely responsible and liable. It is to be noted that past performance is not necessarily indicative of future results. In this respect, past performance of a financial product do not guarantee any and are not an indication as to future performance; (d) the use and interpretation of this document require financial skill and judgement. Any utilisation whatsoever by the reader/recipient, relating to this document, as well as any decision which the reader/recipient may take regarding a possible purchase or sale of Shares, Stock Options, CFDs and similar and assimilated products, are the sole responsibility and liability of the reader/recipient who acknowledges and agrees to this as a condition precedent to and prior to any access to this document; (e) as a result of the above, all legal liability directly or indirectly arising whatsoever.

Disclaimer: CMC Markets is an order execution-only service. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

Sign up for market update emails