Daily Investment Strategy
Recommended Stock：Tencent（700）
Media reports indicate that Apple is negotiating with Tencent and ByteDance to integrate their artificial intelligence models into iPhones sold in China. At the same time, Tencent has announced a formal strategic cooperation agreement with Honor, aiming for deep collaboration on cloud AI development. Tencent's ability to empower its ecosystem through AI presents long-term investment value. The CEO of Tencent Cloud and Smart Industries Group (CSIG) revealed at the Tencent Global Digital Ecosystem Conference that over the past year, Tencent's generative AI-enhanced cloud services have not only driven internal growth but also improved sales conversion rates and productivity for more than 2 million external cloud customers. Notably, achieved double-digit growth of partners with orders exceeding one million; many SaaS partners have seen their revenues increase by more than 100%, and international business growth has also surpassed double digits. Additionally, as China's macroeconomic outlook improves, Tencent's payment business may benefit from a recovery in the retail market, while its advertising business could gain from increased spending by merchants. However, if the macroeconomic situation does not improve, Tencent maintains a defensive position compared to other tech stocks due to its game segment, which accounts for over one-third of its revenue and is less correlated with economic cycles. Tencent is one of our top picks for 2025. Target price: $507.
US PCE Index Below Expectations
Last Friday, the United States announced the Personal Consumption Expenditure (PCE) Price Index. The PCE index for November rose by 2.4% year-on-year, below the expected 2.5%. The PCE index for November increased by 0.1% month-on-month, also below the market expectation of 0.2%. The lower-than-expected rise in the PCE index somewhat alleviated the Federal Reserve's short-term concerns about further narrowing the space for interest rate cuts next year, boosting the performance of U.S. stocks on Friday.
On Friday, southbound funds saw a net inflow of 1.63 billion HKD. Tencent (700) received the highest inflow of 2.81 billion HKD, followed by SMIC (981). The Tracker Fund of Hong Kong (2800) recorded the highest net outflow of 4.19 billion HKD, followed by Alibaba (9988).
Wen Kit Kenny is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/AJF244/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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