Daily Investment Strategy

Daily focus：Haier（6690）

The impact of China's AI startup DeepSeek continues to ferment in the capital market. The Hong Kong stock market, which was once considered to lack AI concepts, is now being reevaluated by investors. Heavyweight stocks like Tencent and Alibaba, as well as some software-related stocks, have seen significant gains. However, the current RSI of the tech index has exceeded 70, indicating overbuying. While tech stocks are likely to have rerating in the long term, sector rotation is possible in the short term after the rapid surge of tech sector. Investors should pay attention to whether non-tech stocks will have opportunities to catch up. In terms of economic data, in January, the prices of new residential properties in first-tier cities in mainland China rose by 0.1% month-over-month, while second-tier cities shifted from being flat to rising by 0.1%, marking the first increase since June 2023. The weak property market has affected people's livelihoods in recent years. If the downward trend is controlled, there may be opportunities for sectors related to people's livelihoods and real estate, such as home appliances, to regain market attention. With the upcoming Two Sessions, policies are expected to cover multiple areas, and funds may flow from tech stocks to other sectors. On January 8, the National Development and Reform Commission and the Ministry of Finance announced policies to implement large-scale equipment renewals and consumer product trade-in programs in 2025. Since the announcement, home appliance stocks have not seen a significant rebound, continuing the sluggish trend that began in October last year. This is mainly due to market concerns about pre-emptive consumption of home appliance demand, increased U.S. tariffs, and the fact that home appliance stocks outperformed the broader market in 2024. We believe that after the decline in October, home appliance stocks which lagged behind the overall market, become more attractive in terms of valuation. Regarding tariffs, a significant proportion of Haier Smart Home's products sold in the U.S. are believed to be locally produced. Additionally, the story of Haier's GPM expansion and clear dividend policy remain unchanged. The 2025E PE is at approx. 10.5x, compared to EPS growth of about 12.5% and 10.2% in 2025 and 2026, respectively. The valuation is reasonable, and there is upside potential of the share price, with opportunities to benefit from sector rotation. Target price HK$28.

S&P 500 falls as Nvidia slides ahead of earnings

Nvidia shares fell more than 3%, leading a broader decline in technology stocks ahead of the company's earnings report due this week. The chip giant's quarterly earnings report will be released after the bell on Wednesday and is expected to be a gauge of demand for artificial intelligence. On the other hand, Apple managed to avoid selling pressure and ended slightly higher after announcing plans to invest $500 billion in the United States over the next four years to boost artificial intelligence, silicon engineering and advanced manufacturing. In terms of economic data, the Fed's preferred inflation measure, the Personal Consumption Expenditures Price Index (PCE), and the second estimate of fourth-quarter gross domestic product will be released later this week, which may provide new clues to the Fed's future policy path.

Hong Kong Stock Connect had a net inflow of HK$13.7bn Monday of which Alibaba (9988) had the largest net inflow, reaching HK$4.4bn; followed by Xiaomi (1810). CNOOC (883) recorded the largest net outflow at $0.57bn, followed by Kuaishou (1024).