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<Research>HSBC Research: HK Utilities Sector Shows Resilience Amid Mkt Turbulence
Recommend 6 Positive 10 Negative 4 |
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HSBC Global Research wrote in its research report that its empirical analysis shows that the Hong Kong utilities sector has consistently been demonstrating its defensive characteristics during major global conflicts. The sector has consistently outperformed the broader market following such events, the report stressed. After major incidents, it even surpassed the HSI by 7% within 60 days. Excluding typical risk-averse sentiment, the sector's core fundamentals are believed to remain solid. Regulatory frameworks and long-term contracts have protected this sector from macroeconomic uncertainties and disruptions. In HSBC Global Research's estimate, the Hong Kong utilities sector will see only minimal impacts on its earnings performance from the fuel price surges as a result of the closure of the Strait of Hormuz, given that regulated utilities in Hong Kong, the UK, and Australia can fully pass on fuel costs to customer bills. Additionally, CLP HOLDINGS (00002.HK) has reduced its forward contract risk exposure since 2022 and implemented operational recovery measures, which the broker views as keeping its financial risk under control. The initial impact of the Iran event may boost the USD, implying foreign exchange translation losses for companies with a high proportion of overseas business, such as CKI HOLDINGS (01038.HK) and POWER ASSETS (00006.HK). However, the broker still believes the overall impact will be very limited. HSBC Global Research has kept a Buy rating on CKI HOLDINGS and CLP HOLDINGS and a Hold rating on POWER ASSETS, with target prices remaining unchanged. Details are available in a separate table. AAStocks Financial News |
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