Evergrande's debt problem may intensify, and the Hang Seng Index may fail to breach the 19,000 mark

Last Friday, the Hang Seng Index opened high but closed lower, with a daily fluctuation of 299.37 points and a trading volume of 965.79 billion yuan. The Hang Seng Index, H-share Index, and Hang Seng Tech Index fell by 0.9%, 1.33%, and 2.39% respectively.

Alibaba (9988) recently announced its first-quarter revenue for 2023 as 234.156 billion yuan, a year-on-year growth of 14%. The net profit attributable to shareholders was 34.332 billion yuan, a year-on-year increase of 51%. Alibaba's performance exceeded expectations, causing its stock price to rise by 1.06%, serving as one of the driving forces behind the positive trend of the Hang Seng Index.

Country Garden (2007) issued a profit warning, expecting significant losses in the first half of 2023, particularly due to the ongoing deterioration in sales and refinancing conditions. The company's available funds on the balance sheet have been decreasing, leading to temporary liquidity pressures. Country Garden's stock price fell by 5.77%, marking the largest decline among blue-chip stocks.

The Hang Seng Index closed with a bearish candlestick, forming a "head and shoulders" bearish pattern when considering the previous trading day's trend. The MACD bearish divergence expanded. There were 497 advancing stocks and 1,140 declining stocks throughout the day, indicating a generally weak market condition.

In July, the final demand Producer Price Index (PPI) in the US increased by 0.3% on a monthly basis and 0.8% on an annual basis, slightly exceeding market expectations. This primarily reflects an increase in service prices. If investor inflation accelerates, it may prompt the Federal Reserve to quicken the pace of interest rate hikes.

The US stock market had mixed developments at the close. Futures and ADR (American Depository Receipts) declined. It is worth noting that Evergrande Group's (2007) bonds were suspended from trading, so be cautious as the issue continues to escalate, which could dampen market sentiment. The Hang Seng Index is expected to be weak, with support levels around 18,800 / 18,500.

China Mobile (0941) primarily engages in providing communication and information services in all thirty-one provinces, autonomous regions, municipalities directly under the central government, as well as Hong Kong within mainland China.

In the first half of 2023, operating revenue reached RMB 530.7 billion, a year-on-year increase of 6.8%. Among them, the revenue from core operations reached RMB 452.2 billion, a year-on-year increase of 6.1%. The total number of connections reached 3.19 billion, with a net increase of 250 million. CHBN achieved comprehensive growth, with HBN revenue accounting for 42.7% of the core operating revenue, an increase of 2.7 percentage points compared to the previous year. Digital transformation revenue reached RMB 132.6 billion, a year-on-year increase of 19.6%, accounting for 29.3% of the core operating revenue. Shareholders' attributable net profit was RMB 76.2 billion, a year-on-year increase of 8.4%. Earnings per share were RMB 3.56, maintaining the leading level among international operators. The proposed interim dividend is HKD 2.43 per share, a year-on-year increase of 10.5%.

The group's stock price has recently been performing well, and there are signs of its presence in the financial technology system. The group's valuation is at an industry-average level, worth paying attention to. If valued at a P/E ratio of 3, the target price would be 72.48 yuan.

The author is a licensed individual of the Hong Kong Securities and Futures Commission and does not hold the aforementioned shares. The above article represents personal opinions.