KGI Asia Commentary

2024.05.24 09:47

Hang Seng Index fell 326 points on Thursday

The Hang Seng Index fell 326 points or 1.7% to 18,868 on Thursday. HSTECH fell 96 points or 2.4% to 3,896 and HSCEI fell 115 points or 1.7% to 6,701. Daily market turnover was HK$129.9bn.

Dow drops 600 points

The S&P 500 ended lower on Thursday as U.S. Treasury yields rose on signs of continued inflation, dampening hopes for a rate cut and offsetting gains in technology stocks led by Nvidia. The Dow Jones index fell 605.78 points to close at 39,065.26 points, a decrease of 1.53%, making it the worst trading day this year. Boeing was the worst performer on the Dow, falling 7.6%. The S&P 500 fell 0.74% to close at 5267.84 points, and the Nasdaq fell 0.39% to close at 16736.03 points. Nvidia shares soared 9.3%, surpassing the $1,000 mark, after Nvidia reported stronger-than-expected first-quarter results and announced a stock split. However, most stocks in the broad market indexes turned negative on Thursday, with more than 400 stocks in the S&P 500 falling. In addition to Nvidia's earnings, there was more corporate news to digest, with shares of Live Nation Entertainment (NYSE: LYV ) falling 8% on reports that the U.S. Department of Justice is planning to sue its ticketing division for alleged monopolistic practices. The company has filed lawsuits and lawmakers are seeking to separate its ticketing unit. Aircraft maker Boeing Co. shares fell more than 7% after the company warned investors it was unlikely to achieve positive cash flow this year.

New signs of rising inflation cool interest rate cut bets

The S&P Global PMI Composite Output Index rose sharply from 51.3 in April to 54.4 in May. The report also highlighted that "the rate of inflation accelerating to register the second-largest monthly increase seen over the past eight months." Meanwhile, initial jobless claims fell more than expected in the week of May 11, fueling concerns about demand-led inflation and forcing traders to curb bullish bets on stocks.

Hong Kong Stock Connect had a net inflow of HK3.51bn on Thursday, of which BOC (3988) had the largest net inflow, reaching HK$1.13bn; followed by Tracker Fund (2800). Tencent (700) recorded the largest net outflow at HK$0.24bn, followed by Meituan (3690).

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China Res Power
00836

In the first four months, the electricity consumption of the whole country increased by 9% yoy; in terms of industries, the electricity consumption of primary industry, secondary industry, tertiary industry and residents' usage increased by 10.1%, 7.5%, 13.5% and 10.8% respectively. In April, the electricity consumption of the whole society increased by 7% yoy. The National Energy Administration (NEA) of China recently published the "Targeted Help and Counterpart Support Work Points for 2024", deploying for the year's work objectives and key tasks. In 2024, the NEA will focus on four aspects of guidance to help revitalize the development. Firstly, it will accelerate the development of clean energy by promoting the construction of wind power and distributed photovoltaic, enhancing the power system adjustment capacity, and exploring new modes of energy development. Secondly, it will strengthen the energy supply infrastructure by consolidating and enhancing the ability to protect the power grid, making up for the shortcomings of people's energy use, and promoting the construction of heat sources for power supply. The news is a positive signal for the development of the new energy industry. As a leader in traditional thermal power, China Resources Power has at the same time strengthened its deployment of renewable energy in recent years. Total net generation of subsidiary power plants in Jan-April 2024 increased by 5.5% yoy to 65,362,078 MWh, among which, subsidiary wind farms increased by 8% yoy to 15,691,145 MWh, subsidiary photovoltaic plants increased by 191.4% yoy to 1,830,610 MWh. The group will continue to develop renewable energy in the future, and therefore is expected to have upsides for both profit and valuation. Target price: $23; Stop- Loss price: $20

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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