Technically, a minor negative divergence has appeared between HKL’s share price and its 21-day RSI. On the weekly chart, annual momentum and the 13-week RSI are at 10-year highs. This does not mean that prices can’t go higher. They probably can. However, in the immediate term, on the weekly candlestick chart, a large shadow has appeared on top of a small body, which may imply that prices have run ahead of themselves. The top of the shadow is at US$7.45. Support for HKL is at US$6.
The stock that is creating a buzz in recent sessions is Hongkong Land (HKL). It is one of the top-performing Straits Times Index components in terms of both price gains and total returns this year (up to Sept 19). overtaken only by ST Engineering and DFI.
The Jardine group has realised that investors like liquid balance sheets. Hongkong Land’s group CEO, who previously held positions in Goldman Sachs, UBS and Mapletree Investments, has articulated a strategy of divesting non-core assets at NAV, and executing a share buyback at a discount to NAV. Since the start of the year, the discount between HKL’s share price and its NAV has narrowed, from 0.25x in the first week of January to 0.49x on Sept 19. The narrowing has come from share prices rising, and not NAV falling.
