Top 10 Traded Hong Kong Stocks on POEMS in August 2020September 4, 2020
In this article, we will look at August’s Top 10 traded Hong Kong stocks on Phillip’s Online Electronic Mart System (POEMS), based on their gross market values traded. We hope this data will give you an overall macroeconomic view and insights on liquidity and consumer trend that affects these popular traded stocks.
In early August, we saw Hong Kong’s Hang Seng Index fall from its July high of 26,780 points on weak Hong Kong’s economic activities. The Index was supported around 24,500 level and its sentiment turned positive in the 2nd half of the month. Restaurants in Hong Kong are allowed to stay open as its COVID-19 measures show positive effects. Hang Seng Index gained almost 1,000 point by the end of the month, with a key 25,500 resistance level to look out for.
Alibaba, Xiaomi and WuXi Biologics will join the Hang Seng Index on 7 September 2020. The three firms will replace developers Sino Land, Snack Maker, Want Want China Holdings, and China Shenhua Energy in the index.1
Without further ado, let’s take a look at the top 10 list, starting from the 10th position:
10th: Zijin Mining (HK: 2899)
One of China’s largest gold producers, Zijin Mining posted a net profit of 2.42 billion yuan (US$349.9 million) for 1H (first half of the year) 2020 which rose 31% from a year earlier. This was attributed to the higher sales generated from both its gold and copper operations.
With Gold prices hitting an all-time high during the COVID-19 pandemic, price soared above US$2,000, a troy ounce for the first time and set new records this month. The company could receive a revenue boost from a strong gold price as it seizes on gold’s upward momentum by increasing output further in the second half of the year.
The gold segment is Zijin’s largest revenue contributor, accounting for more than 60% of 1H2020 revenue.12
9th: Yeahka Limited (HK: 9923)
Yeahka Limited, a leading payment-based technology platform in China providing payment and business services to merchants and consumers was listed on Hong Kong exchange on 1 June 2020. The company’s mission is to continuously create value for merchants and consumers, focusing on the needs of millions of small and micro merchants in China.
The COVID-19 pandemic has triggered offline merchants to jump-start their digitalisation process amidst rapidly increasing demand for technology. The company recorded a net profit of 222.6 million yuan for six months ending 30 June, as compared to a net loss of 18.6 million yuan for the same period in 2019. 11
8th: IGG INC (HKEX: 0799)
IGG INC, a leading global developer and operator of online games made it to the 8th position on POEMS. Its main games amongst others, include Lords Mobile and Castle Clash.
The COVID-19 pandemic led to a global rise in consumer spending on mobile and PC games. IGG shares surged by as much as 50% in August 2020 following their 1H report that included an 88% jump in earnings and dividend plans.10
7th: Meituan DianPing (HKEX: 3690)
As one of the largest food delivery e-commerce companies in China, Meituan Dianping is reaping the benefits of an increasing number of consumers shopping online. The COVID-19 pandemic has accelerated the demand for delivery of products and services to consumers’ doorsteps.
The company posted an operating profit of 2.2 billion yuan in Q2 as compared to a loss of 1.58 billion yuan in Q1 of 2020 as lockdown rules in China relaxed. Analysts forecast that the pace of digitisation will continue to accelerate and it has become a trend and habit for individual consumers to go digital.9
6th: BYD Co LTD (HKEX: 1211)
BYD is a major electric vehicle maker in China backed by U.S. investor Warren Buffett. When it executed a market expansion strategy, the Chinese company’s net profit rose to 2.47 billion yuan (US$ 359.8 million) in comparison to 575.20 million yuan the same period last year.
During the six month ending 30 June 2020, its revenue climbed to 31.39 billion yuan from 23.28 billion yuan. BYD started making masks early this year right after the COVID-19 outbreak and became the world’s biggest mask maker.8 today. BYD said it will focus on expanding its 5G products and Internet of Things solutions in the second half of 2020. The company made it to the 6th position in POEMS.
5th: JD.com, Inc (HKEX: 9618)
The dual-listed (NASDAQ: JD) company debuted on 18 June 2020 on the Hong Kong Exchange, closing 3.5% higher on its first day of trading.
Its debut coincided with one of China’s biggest shopping events, where the “618 festival” saw a transaction volume of 269.2 billion yuan through its online platform. With the increased revenue of 20.7% in the first quarter of 2020, JD.com showed that its core business has not waned despite the pandemic.
With continued expansion in its own supply chain and delivery systems, its positive growth is likely to continue even in the near future. 6,7
4th: Xiaomi Corporation (HKEX: 1810)
Xiaomi Corporation’s earnings release for Q1 2020 (54.28 billion yuan) beat the forecast figures (51.87 billion yuan) at over 4.6% increase. Revenue in Q2 2020 from its smartphone segment was at 31.6 billion yuan, upholding the top four position globally for smartphones.
The release of their latest 5G flagship smartphone, Mi 10 Ultra, garnered 400 million yuan in sales in just 10 minutes of its debut. With more than 600 million yuan in investment for a new smart factory and upgraded core strategy in AIoT segment, Xiaomi continues to maintain its foothold as a global leader in the smartphone industry. 5
3rd: Alibaba (HKEX: 9988)
The third most traded HKEX stock on POEMS for the month of August was Alibaba. Its share price had increased by more than 50% since its IPO to over HKD 280 per share.
Alibaba Group Holdings saw the largest stock offering of HK$94 billion in 2019. The stock closed 6.6% above its listing price (HKD 176) on the first trading day. As the world’s largest retailer and e-commerce company, it had a stellar performance in terms of revenue in Q1 2020 with a 22% YoY increase.
Despite the pandemic, we also saw an accelerated growth in Alibaba’s Tmall GMW growing 27% YoY. With its large market capitalisation and increased e-commerce penetration, Alibaba is slated to maintain its rate of growth and increased performance across all major business segments.4
2nd: Semiconductor Manufacturing International Corporation (HKEX: 0981)
In second place is SMIC, China’s largest chip foundry. Its recent earnings release showed that the company’s sales rose 18.7% YoY to US$938 million in Q2 2020.
In May 2020, the Made in China 2025 programme saw a combined investment of US$2 billion yuan in SMIC from the China National Integrated Circuit Industry Investment Fund and the Shanghai Integrated Circuit Industry Investment Fund. This investment helped to further SMIC’s growth through a US$6.7 billion yuan investment in facility investment.
We expect a higher increase in growth and production due to the receipt of extensive support such as subsidies and tax benefits from the local governments.3
1st: Tencent (HKEX: 0700)
As the world’s largest video game vendor, Tencent continues to grow and surpass forecasts in the face of the current COVID-19 pandemic and made it to the top position in August. Users across the globe turned to video games and smartphone-based entertainments in the midst of a global lockdown.
WeGame, Tencent’s flagship gaming platform, boasted over 200 million active users as the global leader in the video gaming industry. 1H 2020 performance showed a 28% increase YoY with a revenue of 222 billion yuan.
Faced with uncertainty as a result of the current pandemic, we can expect global users to continue seeking home entertainment such as video games and this would help to maintain the current growth in Tencent’s revenue2.
Since the start of the year, many companies’ profits have been affected by the COVID-19 pandemic. While companies in sectors like tourism, casino and hospitality suffered greatly, other companies grow from strength to strength. A common trend observed in the above list of stocks was the increased investments in the companies’ digital platforms. With China being the first to experience the consequences of the COVID-19 pandemic, it is also the first to recover and may become one of the few major economies to register a positive GDP growth this year.
Do you have any personal views on the above companies? Join our global investment community telegram group and leave us your comments!
-  https://www.scmp.com/business/markets/article/3099187/hong-kong-stocks-gain-xiaomi-continues-surge-after-being-tapped
-  https://www.prnewswire.com/news-releases/tencent-announces-2020-second-quarter-and-interim-results-301110726.html
-  https://www.reuters.com/article/china-semiconductor-smic/china-semiconductor-fab-smic-gets-22-bln-investment-from-govt-funds-amid-global-chip-spat-idUSL4N2D019Y
-  https://www.alibabagroup.com/en/ir/earnings
-  https://company.mi.com/en-us/ir/indexContent/
-  https://www.cnbc.com/2020/06/18/jd-com-shares-hong-kong-secondary-listing-debut.html
-  https://ir.jd.com/quarterly-results
-  https://www.todayonline.com/world/electric-car-maker-byd-says-profits-becomes-leading-mask-maker
-  https://www.cnbc.com/2020/08/24/china-e-commerce-boosted-by-shift-to-online-shopping-after-coronavirus.html
-  https://investor.igg.com/
-  https://en.prnasia.com/releases/apac/yeahka-announces-2020-interim-results-technology-enabled-business-services-realized-rapid-growth-in-revenue-and-its-customer-base-289543.shtml
-  https://www.nasdaq.com/articles/first-half-profit-at-chinese-miner-zijin-jumps-by-nearly-a-third-as-gold-prices-surge-2020
About the author
Jason Chan (Assistant Manager) and Clement Chua (Equities Dealer)
Jason holds a Bachelor’s Degree in Banking and Finance from Singapore Institute of Management, University of London and has previous experience in advisory services for investment and insurance products. He joined Phillip Securities in 2016 and is currently part of the Global Markets Day Trading Team, providing trade execution support to both internal and external customers for the Asian Markets.Clement is a dealer for the Global Markets Team focusing on the day markets. He graduated from Monash University with a Bachelor of Business, majoring in Banking and Finance.