It has been a strong start for stocks in both Hong Kong and mainland China this year. While many analysts don’t expect the final quarter to be sizzling for large cap stocks because of weaker sentiments, we might want to have a look at the micro-cap stocks that are performing well today. For the uninitiated, the GEM board, also known as the Growth Enterprise Market, is a board on the Hong Kong stock exchange for growth companies that do not meet the main board’s listing requirements.
The attractive part about investing in micro-cap stocks is that when there is a surge in the price of the stock, the returns can be enormous in percentage terms. A price surge as little as HKD 0.02 can translate to decent gains. Having said that, we have to note that thinly traded GEM stocks can create an illusion of high returns when there are only a few transactions per day. As such, we have filtered out those stocks and are only providing coverage for GEM stocks with significant trading volume.
The bottom line is that it’s difficult to research tens of thousands of GEM stocks out there. So, here are 2 GEM stocks that have received growing interest recently.
#1 China Brilliant Global (8026.HK)
We know that gold can be particularly attractive to hold during times of market uncertainty. You would notice that gold prices usually move in the opposite direction of the equity market. China Brilliant Global (8026.HK) has gone up at least 170% from July 2019; however, there are experts who believe that this could just be the start of company’s rise. As the outlook of global economy remains subdued, central banks are looking at more interest rate cuts. As such, gold and gold-linked stocks will likely benefit in the short to medium term.
Just recently, the Group has reported an increase of 21.6% of revenue (approximately HK$26,618,000) as compared to the corresponding period in the previous financial year. The increase in revenue was mainly attributable to the increase in the revenue from the Group’s Jewelry Business.
The Group’s Jewellery business under the Luk Fook brand has enjoyed an increase in revenue of approximately 101% year on year. The increase in revenue from the Jewellery Business for the period under review was mainly because of the increase in wholesale of golden jewellery products in PRC. Other jewellery products sold by the group includes gold, karat gold, platinum, diamond and gemstones.
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#2 Evershine Group (8022.HK)
Evershine Group Holdings Limited is an investment holding company mainly engaged in property development and investment business. The Group operates its business through five segments, namely Property Development and Investment, Money Lending, Trading of Onyx marbles and red wine, Construction and operation of the cemeteries in Mainland China and Mobile Application. The Mobile Application segment is engaged in the development of mobile games, game publishing, applications, related intellectual property and platform, and provision of related solutions.
From its latest annual report, whilst loss making in general, the Group recorded 1,478% increase in revenue compared to the corresponding period of 2018, which is mainly attributable to property sales of which commenced during the first half of the year by a subsidiary in Turkey. The stock has been on the downtrend for the past two months. Will there be a possibility for rebound before end of the year?