Daily Investment Strategy
Recommended Stock：Tencent (700)
Tencent’s 3Q revenue is expected to be at RMB167.94bn, up 8.6% YoY, slightly higher than the 8% growth in 2Q. By segment, value-added services revenue is expected to grow 9.2% YoY, an increase from 2Q’s 6.2%, driven by accelerated gaming revenue. Domestic gaming revenue is forecasted to rise by 13.1%, and international gaming revenue by 12.7%, both improving from 2Q’s 8.8% and 9.4% growth. Due to the summer season, “Honor of Kings” turnover grew from $126mn in June to $224mn in August, while new game “Dungeon and Fighter” generated $174mn in August, surpassing “PUBG Mobile” as Tencent's second-largest turnover contributor. With gaming business maintains leading position, the prospect of Tencent remain positive. Target price: $480; Stop- Loss price: $374.
Yields rose ahead of CPI data
U.S. bond yields rose on Tuesday as investors became more cautious ahead of Wednesday's CPI data. The CPI figure is expected to have accelerated in October, rising to 2.6% from 2.4% a month earlier. The Fed cut interest rates by 25 basis points last week and reiterated that it would continue to be data-driven in determining the direction of rates. Recent signs of sticky inflation have raised some doubts about how much further interest rates can fall. In addition to the CPI data, the focus this week will be on speeches by a number of Fed officials for further insight into the Fed's plans.
Hong Kong Stock Connect had a net inflow of HK9.7bn on Tuesday of which Tracker Fund (2800) had the largest net inflow, reaching HK$8.9bn; followed by HSCEI ETF (2828). China Mobile (941) recorded the largest net outflow at HK$0.75bn, followed by Meituan (3690).
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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