Hang Seng Index
Established in 1969, the Hang Seng Index is the benchmark stock market index, monitoring changes in 48 constituent blue chip stocks. It is maintained by Hang Seng Indexes Company, a unit of Hang Seng Bank, which is controlled by HSBC Group.
Investors shun Li & Fung shares
Shares in Li & Fung declined yesterday even after the export trading company tried to rebut a UBS report saying it is losing some big clients.
The stock fell 28 HK cents, or 1.77 per cent, to HK$15.50 yesterday and has fallen 78 HK cents, or 4.79 per cent, since Wednesday when the research report was released. The decline came as the Hang Seng Index jumped 336.92 points, or 1.52 per cent, to 22,398.1 yesterday.
It was the second time in five weeks that UBS issued a research report and expressed negative views on the stock. Li & Fung's top management held a four-hour meeting with about 50 analysts last week to give an update on the firm's business strategies.
Li & Fung chief executive Bruce Rockowitz (pictured) was quoted by Bloomberg as saying the company 'is not losing factories and has no issue placing orders, now or ever'.
'They are trying to find negative trends in our business where they don't exist,' he said of the UBS analysts Spencer Leung, Joy Tsai and Erica Poon Werkun.
The latest UBS report quoted 'industry sources' as saying that Li & Fung's larger suppliers were considering leaving the company and that the trigger was the deteriorating quality of the group's products.
The analysts argued that some retailers, such as Myer and Toys 'R' Us, were setting up their own direct sourcing facilities, even though company management said more retailers were trading through Li & Fung.
On the day of the meeting on June 22, Deutsche Bank and DBS Securities raised their recommendation on Li & Fung to 'buy' from 'hold'. Deutsche Bank's target price on the stock was at HK$20.53 and DBS' was at HK$20.50 within 12 months.
However, UBS has kept its 'sell' recommendation on the stock with a target price of HK$9.