1. Global Financial Journalism
Week 5: Covering stock markets
Jeffrey Timmermans
Friday, 1 March, 13

2. What’s a share?
✤ Entitles owner to a partial ownership stake in a company
✤ Entitles owner to a (small) share in everything the company owns,
including its profits
✤ Net profit = profit attributable to shareholders
✤ Dividends are paid to shareholders from net profit
✤ Does not entitle owner to a management role in the company
Friday, 1 March, 13

3. What moves share prices?
✤ Supply & Demand
✤ The broader economy
✤ Economic growth
✤ Inflation/interest rates
✤ Prices of other assets
✤ Company earnings, especially expectations of future earnings
Friday, 1 March, 13

4. Share prices are news because...
✤ They reflect market participants’ expectations of the future
performance of that company
✤ And those expectations are focused on how much those companies
will earn in the future (net profit)
✤ Changes in those expectations lead to changes in share prices
Friday, 1 March, 13

5. Advance prep
✤ Get a list of potential market sources – and their contact details –
ready beforehand
✤ You’re welcome and encouraged to share sources
✤ Try to start writing your comment before market close
✤ Much of background (on global/local events) can be prepared in
advance
✤ Can use “told Reuters” quotes if totally unable to get own quotes/
good quotes.
Friday, 1 March, 13

6. Breaking down the stock market
✤ Benchmark index
✤ Sectoral sub-indexes
✤ Individual share prices
✤ Compare individual prices with other prices and sub-indexes
✤ The index doesn’t tell the whole story: it’s a market of stocks
Friday, 1 March, 13

7. Writing about indexes & averages
✤ Focus (usually) on the benchmark index in your lede, but don’t
neglect sector indexes or broader indexes
✤ Comparisons between indexes can be illuminating
✤ Use percentage change for daily moves
✤ Has a trend been broken?
✤ Has a new high or low been reached?
Friday, 1 March, 13

8. Hong Kong stock indexes
Source: Hang Seng Indexes (12:00pm Feb. 28, 2013)
Friday, 1 March, 13

9. Top 10 Hang Seng Index levels
Source: Hong Kong Exchanges, data as of Sept. 31, 2010
Friday, 1 March, 13

10. Sector Research
✤ Sectors broken into industries
✤ Compare individual companies with their industries to find stories
✤ Individual sectors often have their own market sub-indexes, for easy
comparison
Friday, 1 March, 13

11. Market Sectors
✤ Basic materials (chemicals, ✤ Healthcare (drugs, hospitals,
paper, metals) biotech)
✤ Consumer cyclical (cars, ✤ Industrial (airplanes, electric
clothes, housing) components)
✤ Consumer non-cyclical (food, ✤ Technology (computers,
beverages) semiconductors)
✤ Energy (oil, pipelines, coal) ✤ Telecom (phones, wireless)
✤ Financial (banks, brokers) ✤ Utilities (electric, gas, water)
Friday, 1 March, 13

12. Writing about shares
✤ A good stock market comment delves below the index to look at the
individual shares driving the market activity
✤ Always check moves of big market-cap shares
✤ Look at market breadth: number of “gainers” vs. “decliners”
✤ An indication of the conviction of sentiment
✤ Don’t forget about volume
Friday, 1 March, 13

13. Market
capitalization
✤ Total shares outstanding
multiplied by current share
price
✤ A measure of the size of a
company
✤ Denominated in a particular
currency
✤ Used to weight shares in a
market index Source: Google Finance
Friday, 1 March, 13

14. Reading stock charts
High
Close
Open
Low
Daily volume
Friday, 1 March, 13

15. Stock Analysis
✤ Fundamental
✤ Examines company’s finances, operations relative to competition
✤ Focus on ratio analysis
✤ Technical
✤ Examines company’s past stock price & trading volume for clues to
future
✤ Focus on chart patterns
Friday, 1 March, 13

16. Price/earnings
ratio
✤ Current share price divided by
earnings per share
✤ A measure of how “cheap” or
“expensive” a share is
✤ Can be based on past earnings
or predicted future earnings
✤ Compare individual share’s
P/E with market or sector
average Source: Google Finance
Friday, 1 March, 13

17. Technical Measures
✤ Support & Resistance
✤ Moving averages
✤ Visual chart patterns: head and shoulders
✤ Relative strength, stochastics, Bollinger bands
✤ Volume analysis: upticks and downticks
Friday, 1 March, 13

18. Support & Resistance
Resistance
Support
20-day
moving
average
Friday, 1 March, 13

19. Brokerage Ratings
✤ Brokers initiate coverage, then upgrade or downgrade
✤ Based on expectations of future earnings
✤ Range from “buy” to “sell,” with different jargon
✤ Sell recommendations are seldom issued
✤ Upgrades/downgrades can affect a stock’s price
Friday, 1 March, 13

20. Finding “cause”
✤ Any big economic news?
✤ Any major local news?
✤ What’s happening in other markets?
✤ Look for sector-wide moves, then individual share moves
✤ Don’t always believe traders’ explanations
Friday, 1 March, 13

21. Finding “context”
02 Oct 2006 07:40 GMT DJ Tokyo Shares End Up For 4th Session On Exporter Gains
TOKYO (Dow Jones)--Strength in export-oriented shares helped guide Japan's stock market higher for the fourth straight session
Monday, but market watchers said the market's sluggish volume indicates the rally will have a tough time overcoming strong resistance
in coming sessions.
The Nikkei 225 Stock Average rose 126.71 points, or 0.8%, to 16254.29. Monday's gain followed a combined 570.13-point rise in the
previous three sessions, including a 102.73 rise last Friday. It was the first time in almost three months that Japan's market had a
four-session winning streak.
Blue-chip exporters such as Canon and Honda led the way, boosted by a drop in the yen to its lowest level against the dollar since Apr.
17 and the stronger-than-expected corporate sentiment reflected in the Bank of Japan's "tankan" survey released earlier Monday.
Canon closed 1.6% higher at Y6,260 while Honda gained 2.5% to Y4,070.
Still, volume for the day was 1.606 billion shares on the TSE's first section, or Y2.3 trillion by value - below the 100-day moving
average of 1.686 billion shares.
"The biggest weakness is the sluggish volume," said Hiroshi Arano, an adviser at Dai-ichi Kangyo Asset Management.
For the rally to overcome near-term resistance between 16300 and 16400 this week, volume needs to increase to around Y2.5 trillion
in value terms, he added.
A month ago, traders said, local institutional investors sold off shares when the Nikkei 225 broke above its monthly average level for
March of 16311. Selling above that level allows institutions to book capital gains for the current fiscal year ending in March 2007. While
the market touched an intraday high of 16329.24 Monday, it soon afterwards dropped below the 16311 level.
The odd man out Monday among the exporters was Sony, which dropped 1.0% to Y4,730 on lingering concerns about the company's
brand image from quality problems. Last Friday, Toshiba and Fujitsu said they would also recall Sony-made lithium-ion batteries
following earlier recall plans by Lenovo and other computer makers.
Friday, 1 March, 13

22. Hong Kong shares may start higher, trim February losses
572 words
28 February 2013
01:12 GMT
Reuters News
LBA
English
(c) 2013 Reuters Limited
HONG KONG, Feb 28 (Reuters) - Hong Kong shares may start higher on Thursday, trimming steep losses so far
this this month, after U.S. Federal Reserve Chairman Ben Bernanke reaffirmed his commitment to strong stimulus.
Bernanke, facing a congressional panel for a second day, also downplayed signs of internal divisions, saying the
policy of quantitative easing has the support of a "significant majority" of top central bank officials.
Sun Hung Kai Properties and Citic Pacific are among companies expected to post corporate earnings later in the
day.
On Wednesday, the Hang Seng Index edged up 0.3 percent to 22,577. The China Enterprises Index of the top
Chinese listings in Hong Kong climbed 0.4 percent.
The benchmarks are down 4.9 and 8.1 percent respectively so far this month, the worst performance for both indices
since May 2012.
Elsewhere in Asia, Japan's Nikkei was up 2 percent, while South Korea's KOSPI was up 1.1 percent at 0100 GMT.
FACTORS TO WATCH:
* Brazilian mining company Vale SA expects moderate growth in the Chinese steel market in 2013, a situation that
should keep average prices close to current levels, a company executive said. Vale posted its first net loss in 10
years in the fourth quarter after taking $5.66 billion in charges for underperforming mines and other mills, a loss twice
as big as expected.
* China Vanke Co Ltd, the country's biggest real estate developer, is looking to extend its foreign investment drive
beyond the high-end U.S. market, as Beijing weighs new measures to cool mainland property prices.
* Macau casino SJM Holdings Ltd, controlled by the family of billionaire tycoon Stanley Ho, posted a 27 percent
increase in net profit for 2012.
Friday, 1 March, 13