Alibaba supports the stock market, and the Hang Seng Index struggles to reach 19,000

The Hang Seng Index opened with a gap down on Wednesday, falling to 18,711.03 points in the morning session before stabilizing. The index rebounded in the afternoon, reaching as high as 19,004.42 points before retreating again, resulting in a daily range of 293.39 points. The Hang Seng Index, Hang Seng China Enterprises Index (HSCEI), and Hang Seng TECH Index declined by 0.33%, 0.28%, and 0.35% respectively. The total trading volume amounted to HKD 111.716 billion.

The performance of US financial companies improved, leading to a rise in stock prices. The stock price of HSBC Holdings (0005) increased by 0.48%, making it one of the better-performing constituents of the Hang Seng Index. On the other hand, the People's Government of Yu Hang District signed a comprehensive strategic partnership agreement with Alibaba (9988)'s "6+N" business group, involving entities such as Taobao Group, Cainiao Group, Alibaba Cloud, Koubei, Fliggy, DAMO Academy, Ali Health, Orange Esports, and Hema. The stock price of Alibaba rose by 0.72% and was one of the contributors to the afternoon rebound of the Hang Seng Index.

The Hang Seng Index once fell to its lowest level since July 12th, but eventually closed with a bullish "spinning top" candlestick, successfully holding above the 10-day simple moving average (SMA). The MACD divergence narrowed, with 715 stocks rising and 867 stocks falling throughout the day, indicating a generally weak market condition.

Investors are looking forward to the end of the tightening cycle, coupled with the positive trend in financial stocks and the improvement of the three major US stock indices. The overnight futures and American Depository Receipts (ADRs) are rising, suggesting that the Hang Seng Index (HSI) may open higher with resistance at the 19,000 level. If it fails to break through, the index may reverse and decline.

The main business of Orient Overseas International (0316) includes container transportation and logistics. Container transportation and logistics services cover global container transportation operations on major routes, such as the Pacific region, Atlantic region, Europe-Asia region, Australia-Asia region, and within the Asian region, as well as providing comprehensive services for efficient storage, movement, management, and monitoring of goods.

The group's total revenue for the second quarter ending June 30, 2023, decreased by 62.6% compared to the same period last year, amounting to $1.979 billion. The total cargo volume increased by 1.3%, and carrying capacity rose by 8.7%. The overall load factor decreased by 5.9% compared to the same period in 2022, with an overall average income per container decreasing by 63.0% compared to the second quarter of last year. In the first six months of 2023, total revenue and total cargo volume decreased by 60.2% and 1.0% respectively compared to the same period last year. Carrying capacity increased by 4.7%, the overall load factor decreased by 4.6% compared to the same period in 2022, and the overall average income per container decreased by 59.8% compared to the same period last year.

Although the group's operational data has been mediocre, there has been a rapid rebound in transpacific freight rates since June with the support of major banks. Under the reduction of sailings and slow recovery of cargo volumes in container shipping companies, the European route freight rates continue to decline. Maersk Line, DHL, and other companies have planned to increase freight rates at the end of July and beginning of August, hoping to replicate the rate increase pattern seen in the transpacific route. These factors are expected to benefit the shipping sector, and it is believed that the group will also benefit.

The group's stock price has recently been trending upward, and there are indications of presence in the financial technology system. The group is valued at a relatively low level compared to peers. If valued at 1.2 times the price-to-earnings ratio, the target price for the group is 141 yuan.

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