Daily Investment Strategy
Recommended Stock：HSBC（HSBC）
HSBC Holdings reported its third-quarter results for 2024, showing a revenue increase to $17 billion, up $800 million or 5% yoy, exceeding expectations. However, net interest income fell to $7.6 billion, a decrease of $1.6 billion compared to the previous year, with a net interest margin of 1.46%, down 24 bps yoy due to higher interest expense on liabilities because of higher interest rates. The profit before tax rose by $800 million to $8.5 billion, driven mainly by growth in wealth management and personal banking, as well as gains in foreign exchange, equities, and global debt market activities. The board approved a third dividend of $0.10 per share and plans to initiate a share buyback program of up to $3 billion, expected to be completed within four months before the full-year results announcement in February 2025. HSBC maintains its guidance from July 2024, with an average tangible equity return target of around 15% for 2025, despite rate cut cycle in the US. Target price: $80; Stop- Loss price: $66.
BOE 25bps cuts as expected; chances of future stagflation increase
In addition to the Fed's interest rate meeting, the BOE also announced a 0.25% interest rate cut from 5% to 4.75%, which was in line with market consensus. The vast majority of committee members agreed to a 25bps rate cut. In its statement, the BOE predicted that the fiscal budget announced last week would only lead to economic growth of 0.75% next year, but growth would stagnate in the next two years. At the same time, inflation may only gradually drop to the target of 2% after three years. This means that the BOE is quite pessimistic about the outlook and believes that the UK may enter a period of stagnation in the next two years.
The net inflow of Hong Kong Stock Connect on Thursday was HK$1.18bn, of which Meituan (3690) had the largest net inflow of HK$889mn, followed by Tencent Holdings (0700). HSCEI ETF (2828) recorded the largest net outflow of HK$3.87bn.
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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