Daily Investment Strategy
Daily focus：Trip.com（9961）
Baidu recently issued $2bn in zero-coupon exchangeable bonds due in 2032, with Trip.com Group as the underlying security. Bondholders cannot exchange their bonds before the first anniversary of issuance unless there's a default. The initial exchange rate is 1,107.0457 Trip.com shares per $100,000 principal, equivalent to an initial exchange price of approximately HK$702.13, representing a 42% premium over Monday's closing price. This structure may trigger hedging transactions in the short term, creating downward pressure on Trip.com's stock. However, these factors don't affect Trip.com's fundamentals, and any temporary decline presents an opportunity. We remain positive on the stock due to: (1) strong domestic, inbound, and outbound travel demand; (2) increased investment in Trip.com will drive overseas OTA development; and (3) active AI development will enhance user experience and long-term competitiveness. Target price: HK$587.
Trump's recession comments trigger a sharp drop in US stocks
President Trump’s refusal to rule out a recession during a Fox News interview, where he described the economy as being in “a transitional phase,” sent shockwaves through financial markets on March 10, 2025. His comments triggered an immediate sell-off, with the Dow plunging nearly 900 points, the S&P 500 dropping 2%, and the Nasdaq plummeting almost 4%, pushing the S&P 500 approximately 8% below its February peak. Investor concerns are amplified by three critical factors: Trump’s aggressive tariff policies against major trading partners (prompting Goldman Sachs to slash its 2025 GDP forecast to 1.7% from 2.4%), February’s disappointing jobs report showing only 151,000 new positions (below the expected 170,000) with unemployment rising to 4.1%, and declining consumer confidence that has the GDPNow tracker suggesting U.S. GDP could contract by 2.4% in Q1 2025. The market reaction reflects growing fears that the administration’s trade policies, combined with weakening economic indicators, could push the U.S. economy into a recession despite Trump’s assertion that “we’re bringing wealth back to America.”
On Monday, Southbound Stock Connect recorded a net inflow of HK$29.6bn. The Tracker Fund of Hong Kong (2800) saw the highest net inflow at HK$10.4bn, followed by the Hang Seng China Enterprises Index ETF (2828). Conversely, SMIC (0981) experienced the largest net outflow of HK$460mn, with Kingdee International (0268) ranking second in net outflows.
Cheung Cho Shing, Joseph 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/ACQ030/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
The materials contained herein are provided by KGI Asia Limited ("KGI") for information only. While such materials are based on or derived from sources believed to be reliable, KGI makes no representation or warranty (express or implied) as to their accuracy or reliability. Neither the information nor the opinions expressed herein constitute, or are to be construed as, an offer or invitation or solicitation of an offer to buy or sell any securities or investments. KGI and its officers, employees, agents and affiliates may have interests in the securities or investments covered herein and accept no liability whatsoever for any loss or consequence whatsoever (whether direct or indirect) resulting from any use of or reliance by you on such materials.
