How to read the financial pages

THE shorter the better seems to be the rule when it comes to financial information in a newspaper. Although limited for space, papers still manage to squeeze in vast amounts of data.

This may be old news to some. Cryptic numbers usually contain more than meets the eye. But even those slightly more adept at stock tracking have been known to miss a beat.

Tuesday through Saturday, the daily rundown of Hong Kong stocks are found near the back of the Business Post in the South China Morning Post.

The pages contain over 700 securities listed on the Hong Kong Stock Exchange and these are listed alphabetically.

The first column in each row gives the name of the share, followed by the close price, and the highest and lowest mid-market price.

The mid-price is as it sounds. Had you bought the shares at the close of business, you may have paid a bit more. Had you sold shares, you would have received a bit less. This is the price which falls mid way.

In the actively traded stocks of large companies, the spread between the buying and selling can be quite small. But in small companies the spread can be large.

Change shows the amount the share price has risen or fallen at the end of yesterday's trading as set against the close of the previous day.

Set against the following column labelled volume, the figures can be helpful.

Volume is recorded on a daily basis in this chart. Big companies will tend to show a higher volume in trading, as will companies which have recently announced changes in structure, shifts in strategy, or new results.

If a big volume is recorded by a small company, look at the company's recent announcements to find out why.

Large price movements and little volume can also mean it's better to sit tight. A small amount of volume in trading may mean only a few shareholders are moving the share price.

If so, the next-day price could return close to its previous day's price and those who traded may be wishing they had sought advice.

While a steady movement in shares traded may suggest the company is healthy, the number of shares in issue should also be kept in mind. A few shareholders might own a large portion of the shares. If these shareholders opt not to trade, volume may be more static than some of the company's counterparts.

The high and low of the share price since the start of the year merely provides a measure of price over a longer term.

Now follows P/E, perhaps one of the most important parts. Readers will recall that P/E, or price earnings ratio, divides the closing price at the end of the day by the earnings per share.

P/E tells how expensive a share is against its earning power. It says how many times you would have to multiply the company's profits to equal the market value of the company.

If the earnings ratio is higher than average, it usually suggests the company is expected to produce above average earnings growth. If below, expectations will fall.

The yield is simple. It is short for dividend yield which is the dividend per share divided by the closing price. This figure is then multiplied by 100. The dividend combines the amount of the interim and the annual dividend.

The last two are volume sensitivity and moving average. The former is shares traded divided by the number of shares. MA is the 40-day moving average in percentage.

Both of these help to paint a bigger picture of the stock.