Hong Kong Has Strong Momentum but Overall Unattractive
Watch the video with Andrew Stotz or read a summary of the country profile on Hong Kong.
Four Pillars of GDP: Driven by private consumption and investments
Hong Kong’s GDP grows at moderate pace. Private consumption and investments have been the main contributors to GDP growth, while net exports have been a drag.
Slow earnings growth expected in Hong Kong
Earnings saw a slight recovery in 2016, but analysts’ estimates for 2017-2018CE* EPS growth are below the Asian average. Return on equity (ROE) is the lowest among Asian markets.
A. Stotz Four Elements: Hong Kong’s rank relative to Asia
Overall, Hong Kong is the second least attractive in Asia considering all our four elements: Fundamentals, Valuation, Momentum, and Risk.
Fundamentals: Hong Kong has the lowest ROE in Asia, hence weak profitability.
Valuation: Low price-to-book value and moderate dividend yield.
Momentum: Hong Kong has good price momentum and had moderate earnings growth in the past 12 months.
Risk: The market’s price volatility compared to other Asian markets is relatively high.
Materials, Real Estate, and Info Tech up 20%+ in 3Q17
Top 3 largest sectors: Real Estate: 18% of the market; Financials: 17%; Information Technology: 16%.
Best sector & stock: Materials: +28.9% & Hengxing Gold Holding Co Ltd: +165.4%.
Worst sector & stock: Telecom: -0.8% & China Communications Services Corp Ltd: -10.2%.
*CE is consensus estimates
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