Daily Investment Strategy
HSI closed on Monday
The Hang Seng Index closed for a day on Monday due to bad weather.
U.S. stocks' 2Q23 result release has begun, and most companies beat consensus
As of July 14th, the EPS 2Q23 of the S&P 500 index companies have fallen by -7.1% YoY. This will be the index since the 2Q20. It was the largest earnings drop and marked the index's third straight quarter of earnings declines. Although earnings continued to fall, they were still higher than market consensus. Among the 30 companies, 80% of the companies' actual EPS were higher than market consensus. In total, the 30 companies reported actual earnings that beat estimates by 8.8%.
Banking sector are the first industry to announce their results. Most of the large banks’ performance is better than expected. It should be noted that the provision for loan losses of 15 banks was US$9.9bn in 2Q23. This compared to $4.9bn in the last year, reflecting approximately 100% growth. If the actual figure for the quarter was $9.9bn, it would be the third-highest figure for the banking industry over the past five years.
The three major US stock indexes all rose. The Nasdaq composite rose 131 points or 0.93% to 14,244; the S&P 500 rose 17 points or 0.39% to 4,522; the DJIA rose 76 points or 0.22% to 34,585.
China's second-quarter economic growth weaker than consensus
China GDP grew by 6.3% YoY in 2Q23, making the economic growth in the 1H23 only 5.5%. The QoQ growth of 0.8% was higher than the expected 0.5%, but its growth has been lower than the second quarter of the past five years. The slower than expected growth rate reflected the weak retail sales, sluggish private sector investment and net exports. In June, the total retail sales of consumer goods increased by 3.1% YoY, a sharp drop from the previous month (12.7%). This partially reflected the high base effect in the last year. Meanwhile, the contribution rate of consumption expenditure to economic growth in the 1H23 reached 77.2%, which is significantly higher than last year. It is expected that in the 2H23, the pull of growth by consumption will continue to appear.
Hong Kong Stock Connect had a net outflow of HK$0.67bn on Friday, of which XPeng (9868) had the largest net inflow, reaching HK$0.22bn; followed by China Unicom (0762). Tencent (0700) recorded the largest net outflow at HK$0.91bn, followed by HSBC (0005).
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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